Coupang, Krafton, Woowa Brothers, Viva Republica, and Daangn have one thing in common: these South Korean companies started as fledgling startups and then grew into unicorns - startups valued at more than $1 billion - or leading tech companies.
They all received early-stage capital investment from Silicon Valley venture capital firm Altos Ventures. When these companies were founded about a decade ago, it was difficult for Korean startups to receive funding from U.S. venture capital firms.
Korean-American Han Kim, CEO of Altos Ventures, paved the way for Korean startups in need of early funding. After completing his tenure as an engineering officer with the U.S. Forces Korea, he went on to earn an MBA from Stanford University. In 1996, he founded Altos Ventures, a venture capital firm that has been instrumental in the growth of numerous Korean startups.
In a recent interview with Chosunilbo, Kim reflected on the early days of his investments in Korean startups, dating back 17 years. “Back then, the Korean startup scene was in its infancy, with only a few upstarts like Naver,” he said. “Altos Ventures now allocates 30 to 40 percent of its total funds to Korean startups.”
Altos Ventures has invested more than $770 million (1 trillion won) in Korea so far. Kim recalled that convincing U.S. backers to invest in Korean startups was challenging. “The hardest question to answer at the time was ‘Why aren’t there any major players in this sector in Korea?’” said Kim.
“Korean venture capital firms were viewed negatively if they decided to sell their investment and exit a company too early, so it was structurally difficult for them to recover their investment.” The only way venture capital firms could recover funds was if the startup they invested in went public, but this often led to unnecessary cost-cutting that weakened growth.
To convince U.S. backers, he set personalized investment strategies for each startup. Before investing in e-commerce company Coupang, he emphasized the fact that Korea’s urban population and online sales volume is larger compared with the U.S.
“Given that the population of the top 10 cities in Korea is larger than the population of top 10 cities in the U.S., Korea is actually a bigger market regarding e-commerce,” Kim noted. “It took less time for Coupang’s transaction value to exceed 1 trillion won than it did for Amazon in the U.S.”
The seeds Kim sowed have grown into giants. Woowa Brothers and Hyperconnect have been successfully acquired by foreign companies, while Krafton and Coupang were listed on the Korean and U.S. stock markets, respectively, with market capitalizations worth billions of dollars. The success of these investments has significantly increased U.S. interest in Korean startups. Kim reinvests his earnings into Korean startups - he invested a total of 346 billion won in 2023.
Kim’s investment strategy involves investing more in companies he has confidence in to help them grow further. Altos Ventures’ investment fund typically has a 12-year maturity, extendable by two additional years at the discretion of the investment manager, after which it can be extended by another year with investor consent.
This approach has proven effective, as seen with Woowa Brothers, which operates Korea’s largest delivery platform Baemin.
“Woowa Brothers founder Kim Bong-jin thought his role was over when revenues exceeded a few million dollars, but we encouraged him to expand beyond his initial success and the company eventually surpassed $700 billion in revenue,” Kim noted. “Our job is to give entrepreneurs the confidence to achieve realistic goals.”
