[THE INVESTOR] Daniel Shin who founded Ticket Monster, one of the nation’s largest e-commerce platforms, has turned into a venture capitalist to fund early-stage startups and be their mentor.
He has recently set up Bass Investment together with co-founder Kang Joon-yeol, former chief strategy officer at Kakao, and CEO Joo Hwan-soo, former service chief of KakaoTalk.
Unlike other VCs here getting funds from the government, Bass is a private equity fund with the initial funding worth 28.6 billion won (US$26.50 million) coming from multiple investors, including Kakao, Naver and Cum2uS, the game company.
“There are many VCs but few of them have experience running tech firms like us. Our portfolio firms also will be benefiting directly from our extensive network with Kakao and Naver as well as Ticket Monster,” Shin told The Investor in a recent interview.
Over the past years when he stayed away from the daily business of the eight-year-old Ticket Monster, Shin has invested his own money in more than 40 startups, including Fast Track Asia, a startup accelerator he co-founded in 2012, TeamBlind, the creator of the anonymous chatting app for employees Blind, and Cash Slide, the mobile security firm.
After years of successful investments, he wanted a more systemic approach and teamed up with the Kakao veterans.
“Human networking is still a critical part of deal-making in this industry but we want to become a more data-driven VC gauging a startup’s potential based on diverse data collected,” he said.
Last week, the firm made its first investment in Gelato Lab, operator of the popular Gelato platform that connects more than 10,000 nail shops across the nation. Launched in July last year, the app boasts 500,000 downloads and 900 million won in monthly sales.
“We do not focus on specific sectors but it is true we are intrigued by businesses related to platform, e-commerce and new media reflecting the background of the managing partners,” he said, adding the firm also aims to invest 20 to 30 percent of the funds in overseas tech firms, especially those in Israel and Southeast Asia.
“There are more talents, startups and mentors and big firms seem eager to invest in promising startups. But it is still extremely difficult for early-stage firms to get funding. We aim to become their first institutional investor supporting their kick-start.”
Shin, 34, is one of the first generation of young entrepreneurs who graduated from elite schools abroad and returned to Korea to start their own business in the late 2000s. After a two-year stint at McKinsey, the Wharton graduate founded Ticket Monster, then a daily-deal site, in 2010 with a modest 5 million won budget.
The firm grew fast, taking advantage of the nation’s burgeoning online shopping market and abundant infrastructure. Now it has become one of the nation’s largest e-commerce platform operators with its total transactions reaching a whopping 4 trillion won annually.
But challenges are still everywhere. Competition with its local rivals Coupang and WeMakePrice is just getting fiercer. Amid their relentless business expansion over the years, all the three firms have not yet posted an operating profit since their establishment.
Ticket Monster also suffered from financial struggles and ownership changes from LivingSocial to Groupon. Shin, the founder, acquired back the firm in 2015 together with private equity firms Kolberg Kravis Roberts and Anchor Equity Partners.
“We are still investing money to speed up growth. What you need to know is we are reducing losses faster than our rivals,” Shin said, hinting the firm could see a turnaround as early as next year. “The market potential is huge and that’s why foreign investors are betting big on the market. More competitive players will survive finally.”
By Lee Ji-yoon (firstname.lastname@example.org)