In 2013, when Dunamu -- now the operator of South Korea's largest crypto exchange, Upbit -- was a fledgling startup with just three employees, Kakao Ventures saw a diamond in the rough
SEOUL — In 2013, when Dunamu -- now the operator of South Korea's largest crypto exchange, Upbit -- was a fledgling startup with just three employees, Kakao Ventures saw a diamond in the rough.
After making the first 200 million-won (US$129,575) seed investment that year, Kim Ki-jun, the chief executive officer (CEO) of the venture capital (VC) firm, spearheaded two follow-up rounds of investments, in 2015 and 2017, totaling 3.3 billion won.
Thirteen years later, Kakao Ventures and its parent company Kakao Corp. sold a part of their stakes in Dunamu, securing around 2.2 trillion won from the exit.
The returns represent more than a 1,000-fold return for Kakao Ventures alone, Kim said in a recent interview with Yonhap News Agency at the company's headquarters in Pangyo, south of Seoul.
"Our efforts to search for and invest in entrepreneurs that continue to change and capture new opportunities … have reaped great results," the CEO said. "We expect to realize a return of around 300 billion won by year's end."
Established in 2012, Kakao Ventures is a South Korean VC firm that focuses on early-stage startups, with 410 billion won of assets under management as of June.
It primarily targets seed and Pre-Series A rounds, and was the first institutional investor in 90 percent of some 300 startups under its house, Kim said.
The company has exited a return of around 150 billion won annually over the past five years and expects to sustain the pace in 2027 with a potential listing of Rebellions, a local chip startup valued at around $2.3 billion.
"It is about time to recoup (investments in Rebellions) through an initial public offering (IPO)," Kim said.
The nuclear engineer-turned venture capitalist said he is noticing a growing interest in South Korean startups amid the global artificial intelligence (AI) boom.
Limited partners from abroad are requesting Kakao Ventures for startup introductions, or secondary share sales, as they rediscover the country's manufacturing capabilities, backed by conglomerates such as Samsung Electronics, SK hynix Inc. and Hyundai Motor Co., as well as its excellent talent pool, he said.
The local stock rally has bolstered investor confidence too, driving up expectations for successful initial public offering exits, he added.
Against this backdrop, Kakao Ventures is envisioning a new fund of around 100 billion won, nearly triple the size of its previous ones. The move is intended to facilitate bolder, yet calculated bets on early-stage companies in capital-intensive sectors, such as AI infrastructure and hardware, Kim explained.
The VC firm has also been turning its attention abroad since last year, funding Silicon Valley startups in space, robotics and semiconductors.