Korea’s SMBA to form VC fund with DFJ, Walden
Draper Fisher Jurvetson (DFJ) and Walden International have agreed to set up a $150 million venture capital fund with South Korea’s Small and Medium Business Administration (SMBA).
The vehicle, tentatively known as the Korea Fund, will receive contributions of $75 million from each of DFJ and Walden. The two VC firms will be responsible for managing the fund, at least 51% of which will be invested in Korean start-ups and small to medium-sized enterprises, SMBA said in a statement.
It is part of a wider three-year government economic innovation initiative. The fund will be marketed alongside the Korean Yozma Fund, which is seeking to raise KRW200 billion ($193 million) by 2017. Announced last year, the latter vehicle is inspired by Israel's Yozma Fund, which was set up by the Israeli government and private players in 1993 and invests in new VC funds.
Earlier this month, Yozma Fund said it would invest KRW1 trillion in Korea over the next three years and help local start-ups go overseas.
Korea is proving increasingly popular among foreign VC firms, with Silicon Valley players Altos Ventures and Digital Entertainment Ventures among those to establish a local presence. Interest is driven by a combination of factors, including the emergence of some first-generation start-ups as enterprises of significant scale and a broader array of VC-friendly policies introduced by the government.
According to AVCJ Research, Korean VC investment reached totaled $457 million across 125 deals in 2013, compared to $378.3 million across 123 deals the previous year. It is the highest annual total since before the global financial crisis. As of early September 2-2014, $366.7 million has been invested across 62 deals.
Much of this growth has come via early-stage investments. Between 2012 and 2013, capital committed in this segment of the market rose from $38.7 million to $91 million - a 135% increase that far exceeds the 7% growth in later-stage VC deals. The number of transactions jumped from 37 to 51.
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