Samsung, Hyundai, LG, SK, and Lotte. These are the conglomerates that represent the South Korean economy. According to a recent article, the top 64 conglomerates in South Korea generate 84% of South Korean gross GDP.
Then how will these conglomerates invest in the startups? According to the CEO Score, the top 500 companies in South Korea made investments to startups over KRW1T (USD 830M) for the first time in 2019. Compared with 2015, the investment amount was KRW 118.2B(USD 99), which has increased ten times in 5 years.
|No.||Company||Amount(KRW B)||Amount (USD M)|
|1||Hyundai Motor Company||715.7||597.2|
|4||Kia Motor Company||234.6||195.8|
|8||Yuhan Co. Ltd||72.5||60.5|
Source: CEO Score
By the industry sector, investment in smart mobility (including shared vehicles), futuristic cars (environment-friendly cars), AI (artificial intelligence), big data, autonomous driving, bio, and FinTech were the most active areas of investment.
Samsung Electronics, the No. 1 Conglomerate in South Korea, invested only KRW 40.8 B(USD 34M) in 12 companies. CEO Score explained that the data is based on the DART of FSS, and Samsung Electronics is making an investment via its legal entity in Silicon Valley.
Then what was the primary purpose of the conglomerate’s investment purpose? Those conglomerates wanted to expand their business sustainability into mobility startups.
Ola, an Indian car-hailing service company, got an investment of KRW 348.7B from the Hyundai Kia Motors Group. Southeast Asia’s most significant car-hailing service provider Grab, also got investment from HYUNDAI Kia Motors Group and SK Holdings in the amount of KRW 193.1B.
Here are the investments by the industry.
As the total investment amounts reflect the domestic and global market investments, the conglomerate has been shown to invest in business models that can create synergy with the legacy business models.
Furthermore, regarding the mobility industry, domestic regulation is expected to be the barrier to investing in the local market.