(Yonhap Interview) Yozma Group to help Korean startups become 'swans'
By Lee Chi-dong
PANGYO, South Korea, June 10 (Yonhap) -- In a literary fairy tale, an ugly duckling matures into a beautiful swan. For the Yozma Group, an Israeli venture capital firm, there are so many "ugly ducklings" in South Korea that have great potential to become swans.
"A lot of Korean startups are undervalued due to the so-called 'Korea discount' or 'Asia discount,'" Lee Won-jae, head of the Yozma Group Korea, said in an interview with Yonhap News Agency. "Bio, healthcare, virtual reality and material sectors, like graphene, are among the most promising ones."
Lee Won-jae, head of the Yozma Group Korea (Courtesy of Yozma Group)
He's leading Yozma's unprecedented campaign in Asia to offer customized entrepreneurship training and support high-potential startups from an early stage. Yozma means 'initiative' in Hebrew.
Founded in 1993, the Tel Aviv-headquartered Yozma Group is known as the trailblazer of the Israeli venture capital industry.
Yigal Erlich, former chief scientist of Israel's Ministry of Industry and Trade, established the historic venture fund behind Israel's transformation into a startup country.
For instance, Yozma invested US$1 million in BioSense, the developer of a treatment for cardiac rhythm disturbance. It was later sold to Johnson & Johnson for around $400 million.
The opening ceremony of a startup campus is under way in Pangyo, south of Seoul, on March 22, 2016, with the attendance of President Park Geun-hye (C) and other dignitaries. (Yonhap file photo)
Riding on Yozma's success, Israel was reborn as a mecca for global venture capital.
As the local market was saturated, Yozma has turned its attention to South Korea.
Now, it's a key partner for the South Korean government in its efforts to foster tech startups and create jobs.
"The 'creative economy' policy (by the Park Geun-hye administration) was a key incentive," Lee said in the interview at his office on Thursday. "Making tours of public and private research institutions in South Korea, Mr. Erlich was quite impressed by their hidden technologies."
Yozma began investment in South Korea three years ago and it opened a "startup campus" in March in Pangyo, located just south of Seoul and nicknamed the nation's Silicon Valley.
It is Yozma's only official startup campus outside Israel in a strategy to turn South Korea into a regional startup hub and also a strategic base for joint ventures with tech companies in other emerging markets such as China, India and Indonesia.
Yigal Erlich (L), founder and chairman of the Yozma Group, and Lee Won-jae, head of the Yozma Group Korea. (Courtesy of Yozma Group)
Frequently traveling to South Korea, Erlich serves as president of the campus and Lee is in charge of administrative tasks.
"Of course, the Yozma Group pursues profits. But this campus itself is a non-profit organization for a corporate social responsibility (CSR) program," Lee said.
It recently launched the Y-Bridge business platform, www.y-bridge.co.kr, to share information on startups and connect human resources.
Lee, born in South Korea but educated in Israel, pointed out that Yozma has insights into global business trends, strong international networks, experienced teams and an outstanding incubating system.
"Yozma will play a win-win game with South Korean startups," he said. "We have the patience to wait for seven or eight years to make profits, given the time needed for finding competitive startups at an early stage and incubating them."
He emphasized that startups here have suffered a problem in globalization, not in technology.
"It's important to go global rather than stay in the domestic market," he said.
A venture business owner presents her products during an audition at Yozma's startup campus in March 2016. (Yonhap file photo)
South Korea's ICT giant Daum Kakao acquired Loc&All, the developer of a local GPS-based mapping app "Kim Gisa," for 62.6 billion won ($54 million) last year, while Israel's Waze, a similar GPS service, was sold to Google reportedly for $1.3 billion in 2013.
"One of the reasons for the gap is that Waze had a global strategy," Lee said.
South Korea experienced the dotcom bubble burst in the early 2000s, partly attributable to a focus on domestic users, he noted.
South Koreans had a popular homemade social networking service, named Cyworld, and a VoIP service Dialpad well before Facebook and Skype came along.
Lee quoted his boss Erlich, who has the expertise to evaluate startups, as saying that a number of South Korea's state-funded research institutes especially have technologies attractive to global tech firms.
Lee added Yozma's goal in South Korea is to help local startups become gorgeous swans, a metaphor Erlich first used.