YEOSU, South Jeolla Province -- Seoul-based venture capital firm SV Investment says despite gloomy forecasts, it continued to invest in Big Hit Entertainment because of its belief in the agency’s founder, Bang Si-hyuk.
Soon after SV bought one-third of Big Hit Entertainment stocks for 3 billion won ($2.6 million) in 2011, Big Hit suffered capital erosion, and SV’s stake value was projected to bottom out within three years.
Still, SV led another 4 billion won round of funding in 2012, backing 1 billion won.
SV Investment CEO Park Sung-ho speaks at a session during Startup Ecosystem Conference on June 21.
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“I thought Bang’s ability to compose and produce songs was hard to replace with anyone else,” said SV Investment CEO Park Sung-ho, speaking to some 250 people at the Startup Ecosystem Conference in Yeosu from June 20-21.
“He was also global-minded, and great in English.”
It was the first time Park has ever publicly commented on the story of how SV Investment got involved with Big Hit Entertainment.
SV Investment eventually reaped a combined 108.8 billion won in returns through a series of stake selloffs in 2015, 2017 and 2018, after BTS debuted in 2013 and went on to become a global hit. It recouped 27-fold its initial investment.
Over the past three years, Big Hit has started to see exponential growth. Revenue jumped to 214.2 billion won in 2018 from 35.2 billion won in 2016. Net profit rose to 50.2 billion won from 9 billion won during the same period.
“Our Director Kim Joong-dong and I visited Big Hit’s office two or three times a week, and we often had dinner with Bang or accompanied him on overseas business trips,” Park said.
Regarding the 80 billion won stake selloff to strategic investors in 2018, he said he was forced to exit Big Hit.
“Our fund’s limited partner did not approve an extension of the fund term,” he said. “In Korea, general partners find it harder to extend the fund terms because they need unanimous approval from all LPs concerned.”
By Son Ji-hyoung (firstname.lastname@example.org)