Smilegate Investment is a large venture capital (VC) company whose assets under management (AUM) are expected to grow as high as one trillion won ($893 billion).
The company has had a track record of securing high yields on products in the contents industry, such as movies and games, since the early 2000s, and has expanded its investments and become one of the top tier VCs.
Young-kwon Koo is one of the key figures in Smilegate Investment. As a general investment manager, he is currently in charge of the bio and healthcare field and global investment. He is considered to be one of the leading figures in the growth of the company, along with CEO Ki-moon Nam.
◇ Growth story: Venture capitalist who worked at Booze Allen, Bain & Co and Monitor Group
Vice president Koo, who was interested in fashion design, majored in business administration at Seoul National University and also studied clothing as a minor subject. He then started a business selling women’s jeans with friends he met in a design academy. Although it initially achieved rapid growth, he says that he should have closed the business due to poor cash flow management. Based on this experience, Koo established cashflow management as the most important principle.
He started his career as a women’s clothing merchandiser at Cheil Fashion Retail Co Ltd. After taking charge of brand management for five years, he set “customer-centric positioning” as a second principle. In 1996 he began work as a strategic consultant at Booz-Allen & Hamilton, and later also worked at Monitor Group and Bain & Co.
Koo worked for global strategic consulting firms for more than 10 years. He helped establish a strategy in business and marketing for domestic and overseas telecommunication companies, financial institutions and pharmaceutical companies. He then took up an executive position at Solitech (now known as Solide).
In 2009, Koo also played a key role in the acquisition of MVP Capital Partners, the predecessor of Smilegate Investment, which started as a joint venture among some individuals. Solitech has secured 818,579 shares (34.26%) through a paid-in capital increase and the purchase of old shares, becoming the largest shareholder.
Solitech sold its stake in MVP Changtu to the game company Smilegate in 2011 due to a slowdown in its flagship business. While previously focusing on the IT industry, it has decided on bio and healthcare as its major investment areas.
◇Investment philosophy: Focus on the essence of venture investment rather than revenue
Venture capital bets on startups with high growth potential through the financial resources of venture associations. The rate of return depends on whether the investment entity is growing or not. Koo said, “We should focus on the essence of venture investment rather than the small profits in front of our eyes.” You should expect that venture investment will produce better treatments or services. Money naturally follows.
Koo is wary of the term “planned investment”, which has recently become a trend in the industry. He does not believe that the approach of only earning returns on investment will last long. “We need to interpret the meaning of policy funds well,” Koo said. “If we try to achieve our goals, economic profits will also arise.”
◇ First track record: Bio company D&D Pharmatech to launch IPO this year
Vice President Koo’s representative portfolio is D&D Pharmatech, a bio company that focuses on developing treatments for illnesses such as degenerative brain disease, fibrosis disease and metabolic diseases, along with five clinical professional subsidiaries based at Johns Hopkins University. Clinical trials are underway in the U.S. for treatments of brain diseases such as Parkinson’s and Alzheimer’s.
Smilegate Investment met up with D&D Pharmatech in 2017 and in 2018 the D&D Pharmatech Series A round was completed. Smilegate Investment Inc. spent six billion won at the time on two funds, and in the following year’s series B round it used several funds to commit 40 billion won and made follow-on investments.
◇ Second track record: Raise series C funding in BioTech company First Biotheraputics Inc.
First Biotheraputics conducts project research and is focusing on developing treatments for degenerative brain diseases. It acquired a U.S. patent for FB-101, a candidate for Parkinson’s treatment, and patents are now being registered in nine major countries around the world, including South Korea, China and Japan.
Koo decided to invest in the belief that it has technology capabilities and teams that are required by bio industries. It raised a total of 18.4 billion won in series B and bridge rounds.
◇ Industry evaluation: “Humble reviewer”
People who have ever worked with him regard him as humble reviewer. He has been praised for his polite attitude when communicating. Ventures also said his thorough studies in related fields made them believe in him.
◇ Future plans: Focus on value-ups, expand overseas investment
Smilegate Investment is one of the largest investment firms in Korea. It is rapidly expanding its influence and this year plans to extend its scope to offshore markets. The firm is aiming at the U.S. and China, which have the biggest consumer markets.
It has set a goal to create offshore funds targeting global limited-partners and plans to invest 100 billion won in bio industries in the U.S. and China. The firm is also expected to introduce various value-up support measures, such as networking among investors and recipients. (Reporting by Lee Kwang-ho)