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"While identifying early-stage companies falls within the domain of VC (venture capital), exit strategies also require the perspective of PE (private equity)."
Jeon Soo-hyup, a founding member of B&A Partners and partner, recently met with Money Today's startup media platform 'Unicorn Factory' to define the company as a "deep-tech VC with PE DNA." He explained that while they bet early on a company's growth potential, they also consider various exit possibilities from the moment of investment, including future M&A (mergers and acquisitions).
B&A Partners is a venture capital firm specializing in ultra-early-stage investments, primarily in manufacturing and deep-tech sectors. Since its establishment in 2017, it has invested in 110 companies, with 65 of them receiving their first institutional investors or VC investment during the seed to pre-A stage. The firm focuses intensely on identifying ultra-early-stage companies, with virtually no cases where the corporate valuation at the time of initial investment exceeded 30 billion won.
If manufacturing and deep-tech form the 'core' supporting the entire portfolio, Jeon is adding B2C (business-to-consumer) consumer goods such as K-food and K-beauty as 'satellites.' He believes that consumer goods companies with stable cash generation capabilities and brand expansion potential are relatively easier to find potential acquirers for, making them suitable for exit strategies through M&A.
This strategy reflects Jeon's PE experience. He began his career at global strategic consulting firm Oliver Wyman, then moved through EastBridge Partners and Dominus Investment, leading small-to-medium-sized M&A deals. Just before joining B&A Partners, he co-founded the independent private equity fund management company Notice Equity Partners.
Jeon, who had been deeply involved in the PE industry for a long time, shifted his focus to VC as he grew increasingly concerned about PE-style investments.
Jeon stated, "As deal sizes grow, deal sourcing tends to become an 'exclusive league' centered on personal networks and connections." He added, "Investment structures also emphasize contractual safety nets such as CB (convertible bonds) and BW (bonds with share subscription rights), prioritizing the possibility of recouping principal over betting on a company's growth potential. This led me to worry that we were gradually moving away from 'investments that bet on a company's growth possibilities.'"
As his concerns deepened, he met Lee Jong-seung, founder and CEO of B&A Partners, who is considered one of Korea's first-generation venture capitalists. Jeon Soo-hyup has over 30 years of experience investing in manufacturing and materials, components, and equipment (MCE) companies within the VC industry. Lee, who majored in electrical and electronic engineering at Yonsei University and KAIST, had a career path nearly opposite to that of Jeon, who studied business administration and built his career in the PE sector.
Jeon said, "I believed that our different experiences could create synergy, so I joined forces with Lee in 2017 to co-found B&A Partners."
Although he moved to the VC stage, he did not discard his PE experience. From the moment of identifying companies, they also consider the possibility of future exits through M&A. A representative success story utilizing this PE background is the K-beauty company Creaver Corporation.
Jeon invested a total of 8.3 billion won in Creaver Corporation and sold part of his holdings to Goodai Global in December 2024, recouping a total of 32.3 billion won. Within approximately one year after the investment was executed, they achieved a return multiple of 3.9 times. The IRR (internal rate of return), reflecting even the speed of capital recovery, reached 224%, marking the highest performance among B&A Partners' portfolio exit cases based on IRR. Considering future growth potential, they still hold approximately 1% of shares and expect additional returns from further increases in corporate valuation.
There are also successful exits through IPOs. The AI data company CrowdWorks, identified by Jeon, achieved a return multiple of 4.4 times and an IRR of 50% through its KOSDAQ listing in 2023.
Currently, the portfolio company that Jeon is most focused on is SweetBio, the operator of the Greek yogurt brand 'Greek Day.' The company is currently the largest shareholder, holding approximately 22% of SweetBio's shares. SweetBio has been expanding its distribution network primarily through online channels, recording sales of 25.3 billion won last year, with a breakthrough in annual sales exceeding 40 billion won this year highly likely. As 'Korean-style Greek yogurt' with a thick texture gains attention in Hong Kong and Taiwan, the company is accelerating its expansion into overseas markets.
Jeon stated, "Once performance begins to rise significantly, we are considering designing an investment structure similar to PE at an appropriate time and selling part of our shares." He added, "Just as in the case of Gong Cha, if corporate valuation increases further after a PE acquisition, the remaining shares allow us to enjoy another round of value appreciation driven by growth."
Under the leadership of Lee and Jeon, B&A Partners has recouped investments through IPOs (initial public offerings) of six portfolio companies: Creaver Corporation M&A, MedFactory, Seonam, ForBioFor, CrowdWorks, CoreLINE Software, and SOS Lab. To date, they have recouped a total of 96.4 billion won from an initial investment principal of 24.4 billion won, achieving a return multiple of approximately 3.9 times. Of this amount, 81.7 billion won was distributed to LPs (limited partners). Currently, B&A Partners' AUM (assets under management) stands at approximately 165 billion won.
The company is planning to establish its eighth closed-end fund in the second half of this year. It intends to continue its existing 'core' strategy of investing primarily in early-stage companies at the seed and pre-A stages and deep-tech technology firms.
With the company's 10th anniversary approaching next year, Jeon is focusing on a key task for preparing the next decade: the growth of young evaluators. The current investment team consists of six members, including Lee and Jeon. Even the tenure of the most recently joined investment evaluator reaches five years, indicating low personnel turnover. The plan is to further expand opportunities for these young evaluators, who have accumulated investment experience and know-how over a long period, to directly identify and lead early-stage investments.
Jeon stated, "For the next 10 years, we will focus on exit strategies by leveraging our PE DNA." He added, "We aim to become a fund management company that enhances its competitiveness by refining B&A Partners' unique investment and exit strategies and proving results to investors."
[Money Today startup media platform Unicorn Factory]
in FUTURE
