PSA: Kakao Ventures is…
Hi, Voice of KV here.
Today I wanted to speak up and provide with you some context. A first-ever narrative over the substance of what is KV, and what made KV, KV.
Most of this will be “useful facts” that has never been spelled out in English before — a bit of history, a bit of how we are structured, and a bit of our place in the current ecosystem of the Korean venture space.
(OK, admittedly, we currently don’t have a proper English version of our website. Also on us.)
Fact #1. KV is “a fully licensed, regulated VC company” in Korea.
There are few types of asset management licenses an investment company can hold here in the peninsula. KV holds the special-purpose one granted by the Ministry of SMEs and Startups called “Changtoo license”, or SIC according to the Korean VC Association (KVCA). Under a special Act (explained in brevity here) our country carved out the early framework to create the nurturing grounds for the VC space, which eventually led to the Renaissance of mobile tech boom in the early 2010s. And right around that time KV’s 1st iteration was born.
So what does this mean really to the world? This means we have the KVCA continuing to look over our shoulder (in good faith) to ensure we we are legit. And just like any other proper VCs, we have raised and continue to form vintage funds, onshored in Korea, bound by LP agreements. With this comes our fiduciary duty to serve the best interest of our fund’s investors, which results in staying away from balance sheet investments, plus some sanctions (we cannot invest into golf courses! Or dance clubs! Yeah that’s part of the rule).
It just happens so that a major amount of capital that systematically trickles into the Korean VC space is still taxpayer’s money. This usually comes down to having few or some government allocation with policy-centric initiatives get distributed across the board. Thus a lot more often than not Korean VCs have to play by the target region mandate (i.e. usually tough to do much overseas investments) in order to serve better the domestic economy, and the stakeholders other than those direct customers of ours wanting to see it benefit the Korean SMBs more so than not. That is the name of the game.
(KV and also other investors have made non-Korean deals in the past, however. This is still allowed to a limited scale. So yes we are capable of backing foreign startups, on a given day and as long as the stars line up.)
Fact #2. Eons ago Kakao Ventures was K Cube Ventures.
KV’s root is traced back to K Cube Ventures, which was founded in 2012 by the then+now founder/chairman of Kakao Corp. (KOSDAQ 035720), the ubiquitous tech brand in Korea one cannot do away with. Kakao is a $50B+ public franchise, as of this writing, and for those who don’t know still, Kakao is WhatsApp + Uber + Spotify + Yahoo (once Google status…) + PayPal + many more. They are a powerhouse, neck to neck with Naver, the other tech giant here in Korea.
In 2012, however, Kakao was a bit more modest in size. It was yet to merge with the larger public company by the name of Daum Communications (which, by its nature, is a super interesting tale but often untold), he wanted to think ahead and start raising an army. He wanted to figure out the best way for the next generation of CEOs, “a hundred of them”, with conviction based on team only. Thus the idea of K Cube Ventures took place and grew. It was a micro-VC (a modest $8~10M private seed fund) with a handful of early employees. It now grew into KV @ $300M AUM and 20+ employees strong.
In 2015 K Cube Ventures joined the Kakao group as a 100% subsidiary. The management company was now under the corporate umbrella but the funds were untouched; KV continued to operate external LP based, vintage funds, mostly taking neutral fund investments from the outside world. And in 2017 the company eventually re-branded into Kakao Ventures.
And yes, the mandate is still true to the founding principles and investment philosophy — be the best neutral, founder-friendly VC money regardless of synergetic angle with Kakao. KV prefers early stage rocket ships that can reach past the stratosphere with or without the help of the parent company and ensures we act on behalf for the best interests of our portfolio companies.
Fact #3. KV is the most active seed stage institutionalized VC in Korea.
Even though our inaugural fund has yet to be fully dissolved (it is due very, very soon), KV has seeded many promising startups and has reared multiple successful exits from our portfolio, which is at ~200 companies, all time. Year after year we have always made the top positions in our league table (yes there is one) for the volume of new investments made. All this while keeping our reputation speckless — a Korean homage to the bay area’s vcguide.co called Nugu Money vouches for our street cred. We work hard, and we work pure.
Our vast collective could be found here on our website for now, but we sincerely recognize the need to better showcase our teeming “family” other than the current edition.
Perhaps a new Medium post series on our growing list is in order.
Fact #4. KV portfolios are globally under-appreciated, and many of them are gunning for breaking out of the mold.
We’ve seen many of our growth stage companies tap into overseas market to grow their ops and business coverage. As a matter of fact, we’ve seen more Korean (and/or Korean expat) founders kick things off elsewhere because they saw a better opportunity in a different country — whether it be the US, Japan, certain parts of Europe, or a budding SEA megalopolis. KV’s 1st ever IPO case was a game company here in Korea, but we have many already backed by or lined up for global fundraising rounds and eventual IPOs here and overseas. And we are rooting for them all!
Please stay tuned for our next article, which is probably going to be called “Kakao Ventures Isn’t…”. Cheers to all.
