[THE INVESTOR] Local venture capital Ascendo Ventures is eying to invest and nurture tech startups with “unfair advantages,” that can thrive in overseas markets.
The unfair advantage for Korean startups, according to Ascendo co-founders Lee Jeong-seok and Shin Dong-suk, is that they can combine technologies with fields that Korea has an upper hand, such as entertainment, beauty, contents and health care, among others.
“We believe firms with a strong basis in software, blockchain, fintech, data, e-commerce and AI will still fare well in the next five to 10 years,” Shin told The Investor in a recent interview. “The startups that can apply these mainstream technologies to specific industries where Korea has an advantage can differentiate themselves globally.”
“This means, we are interested in beauty startups that implement innovative technologies, not all beauty startups. New technology that can affect the K-pop industry is also appealing,” Shin emphasized. “Another example is startups that can utilize Korea’s pool of patient data from large hospitals for smart health care.”
With this in mind, the newcomer -- which was established just last year -- is seeking to emerge as a serious player in the local venture capital market by providing two main things to startups: hands-on support and global network.
Ascendo Venture Managing Directors Shin Dong-suk (left) and Lee Jeong-seok
“We are planning to invest in startups that can grow the most with our hands-on support,” said Lee. “It is important that we can add value to startups, as well as input our capability and network to grow together.”
Hands-on support includes offering strategic advice, giving information and insights on the market and regulations, as well as introducing prospective investors and partners. It is essential for startups -- especially in the early stage -- to have this kind of support if they are seeking to have a footprint overseas, said Shin.
“I think one role of investors is to build up a network for startups to connect with other investors and partners,” he said. “For most startups, they don’t have enough time to go around and meet people. Because they have to make products and focus on sales. That’s where VCs come in. Because we know what the startups need, we can create a network for future investments and partnership opportunities.”
But that doesn’t mean money is not important.
“Capital is the most critical aspect in hands-on support,” said Lee. “It is important to make sure funding is not causing concerns for startups in their initial stage, when they have to figure out the market needs and focus on product quality.”
That is why Ascendo Ventures is near to closing its first fund in the first half of this year. It plans to roll out three new funds this year that total 80 billion won (US$74.88 million).
Once the funds debut, it plans to actively invest in up-and-rising startups, mostly at the early stage. It will begin by investing in Korean startups to make a market presence and then expand into overseas startups, with a focus on Southeast Asia.
“The whole Southeast Asian market, with more than 600 million population, provides vast opportunities for startups and investors,” said Shin. “With rising middle-class and young population, it’s a promising market with room to develop. We are especially interested in Vietnam and Indonesia.”
The rush of global tech firms to Southeast Asia, including most recently Amazon, Alibaba and Google, is also a good sign for startups. “The presence of large companies in the market could threaten startups, but that could also become a good exit opportunity for them in the future,” said Shin.
Ascendo’s cross-border insights and global network stem from the duo’s unique background in the industry ranging from consulting to startups, VC and conglomerates.
Before launching Ascendo, Shin, who studied computer science at Seoul National University, worked at global consulting firm Accenture, SoftBank Ventures Korea and Silicon Valley-based VC Formation 8 -- during the time he invested in startups like MyMusicTaste and Encored. He also found his own startups in the past.
Lee, who studied electric engineering at KAIST, comes with vast experience in Korean conglomerates, including Samsung, LG, LS and Cheil Worldwide, with a focus on corporate strategy and business development. He also worked at LB Investment -- private equity and VC firm associated with LG Group -- creating China-focused venture funds, as well as established a new VC BA Partners with a 14 billion won fund prior to joining Ascendo.
“Our greatest asset is the global network we accumulated when working in different companies and funds and invested in various startups,” said Lee. “From my experience at major corporates, I am well aware of the needs of the corporates when it comes to their strategy and investing in startups,” said Lee.
The VC is inviting large companies as limited partners for their planned funds. “When large companies invest in funds, they are not only looking for returns, but also the opportunity to scout emerging startups,” he said. “Ascendo is like a platform that connects big companies with startups, giving new business opportunities for the companies. This will, in the end, bolster our network.”
Ascendo Ventures is optimistic that its value-added investment is a niche market in the competitive VC landscape.
“We don’t want to ‘spray and pray,’” said Lee. “We want authentic engagement with the startups.”
By Park Ga-young and Ahn Sung-mi (email@example.com) (firstname.lastname@example.org)