"I want to be the VC that tech companies seek first... I will become a partner in manufacturing innovation"

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"Startup investment is special because, unlike investing in listed companies, it involves directly discovering companies and growing alongside them."

Choi Young-joon, who leads the venture capital (VC) firm KH Venture Partners launched in October 2023, explained the essence of startup investment this way. Having experienced investments in listed stocks and private equity (PE) funds at an asset management company, he is now focusing on discovering early-stage technology companies and helping them grow into leaders of future industries.

KH Venture Partners was selected for the first phase of the Korea Venture Fund (KVF) fund-of-funds program, specifically in the startup early-stage rookie category, marking the start of its full-scale investment expansion. The firm is currently promoting the establishment of a new blended fund with a scale of 15 billion won and plans to hold an establishment meeting between the end of this month and early next month to finalize the fund formation.

The main contributors to the fund are the Korea Venture Fund (KVF) and its parent company, KH Vatec. The KVF will contribute approximately 60% of the total scale, while the remainder will be raised through KH Vatec and regional investment programs. KH Vatec is a KOSDAQ-listed electronic components manufacturer that produces hinges for Samsung Electronics' foldable smartphones. KH Venture Partners is also considering expanding the fund size by securing additional contributors.

This fund targets early-stage startups with less than three years of operation or annual sales of 2 billion won or less. In particular, it plans to focus on discovering technology companies that can solve problems in industrial fields, centering on green tech and deep tech sectors.

Choi Young-joon stated, "We plan to actively conduct deal sourcing centered on early-stage companies with technological competitiveness." He added, "Since our parent company is recently expanding its business areas into new ventures such as robotics and secondary batteries, we are also closely examining promising companies in related industries."

Discovering regional companies is also one of the key investment strategies. Since this fund must allocate more than 20% of its total investment to local companies, it is building a network centered on Creative Economy Innovation Centers and relevant regional institutional investors. The plan includes actively discovering promising companies by cooperating with Busan, Gwangju, Gyeongbuk, and Daegu Creative Economy Innovation Centers, as well as the Gumi Electronics and Information Technology Research Institute.

Choi Young-joon gained investment experience at Idea Bridge Asset Management and Golden Bridge Asset Management. His connection with private equity investments began during his tenure as a PEF team leader at Idea Bridge Asset Management, when he participated in the investment in Galaxy Corporation.

Choi Young-joon said, "At the time of the investment, it was a small-scale IP company, but watching its growth process into a unicorn with a corporate valuation exceeding 1 trillion won made me truly feel the charm of startup investment." He added, "Unlike investing in listed stocks, I came to believe that early-stage investment is ultimately an investment based on people."

He explained that by observing Galaxy Corporation's growth process, he realized that for early-stage companies, the entrepreneur's capabilities determine success or failure more than financial statements. This led him to adopt the entrepreneur's problem-solving abilities and execution power as important criteria for investment decisions.

Choi Young-joon stated, "There is a significant difference between an entrepreneur who admits unknown parts when asked unexpected questions during the IR process and explains future improvement plans, and one who does not." He added, "By seeing how they overcame failure experiences in the business process and how they adjusted their business direction, we can confirm their crisis response capabilities and leadership."

The investment companies discovered under his leadership at KH Venture Partners were also selected based on these criteria. Soltop, a representative portfolio company, successfully secured pre-IPO investment last November, while HTC, which develops automatic fire suppression devices for preventing fires in electric vehicles and energy storage systems (ESS), has entered the supply chain of domestic automakers and is accelerating its growth.

The firm is also actively creating business synergies between portfolio companies and its parent company. Eastern Gear recently signed a memorandum of understanding (MOU) with KH Vatec to advance high-precision reducer technology for robots and is conducting joint research and development. While investment decisions are made independently, the firm seeks ways to increase corporate valuation through collaboration with the parent company after investment.

Choi Young-joon said, "I want to become the venture capital that tech companies facing structural problems in South Korea's manufacturing industry and future industries seek first." He added, "We will not merely supply investment funds but will play a partner role by providing substantial help during the company's growth process."

[MoneyToday startup media platform Unicorn Factory]