What Korean Startups Should Look for in an Investor: Smart Money

You as a Korean startup entrepreneur want Smart Money that is actually beneficial to you.  Let us say you have a good product or a good technology and you have convinced enough people and now you’ve got Shinhan bank offering you $500,000 or $1 million or you have some Angel pool that wants to invest in you.  That is not the money you want for the longer term.  These are the things Korean startups really need to consider when getting investments.

What kind of investors are they?

You should know as much as you can about your investor.  Are they Angel stage? Early Stage?  Most importantly for you, the entrepreneur is whether they have the wallet to actually follow through and help you grow.  Can you find investors that believe in what you are doing and that can actually grow with you?  That will actually help you not just with the seed but for series A/B.  They don’t even have to lead the round, because actually as a venture capitalist I don’t want to lead every round.  I want to lead the first round to set the right precedent but I want somebody else who you’ve convinced to come in and take the next round.  Then I will follow in on it.

Are they financial or strategic?

I am not just about making money, I am actually looking to have my investment in you be strategic for something else I am doing, my other investments.  So that is kind of the distinction that you need to make, are they interested in me because they want to make money or is this part of their bigger scheme?

Get to know your investors

Spend some outside time with your investors so you understand what they are like.  Do your due diligence by talking to other companies they have invested into.  How has this investor been treating you?

Investors with relevant knowledge.

If the investors do not know the sector you are talking about or the technology that you possess?  That investor does not have the network to actually help you.  Does the investor know something that is useful to you.  Especially if you are going to your B or C stage and you are going to international expansion.  Are the investors going to be helpful because they know people, they know the sector, have they invested in this type of investment before?  That makes the due diligence process much easier and that makes the entrepreneur’s job easier and overall that will make the relationship a lot easier going forward.

Have they been successful?

I personally can tell you that as we are just forming our fund and we will officially launch in January.  We don’t have a track record, but we have exited many times and have made money.  Money can be a representation of if they have done their job well.  Smartly investing and actually exiting.

Can they watch your six?

This is an American terminology but it basically means can they watch your back (6 O’clock).  Most Korean entrepreneurs are very busy charging forward, they have the energy, they have the motivation, they have the drive and vision.  SO they are moving forward and to your 3 and 9 are your competitors.  Sometimes you are so focused on what you are doing you sometimes forget about your 3 and 9.  So if you are in your series B and a small company took your model and tweaked it a little bit and can outflank you.  That can kill a company.

Are they a full-service firm?

This doesn’t mean they have to be a firm with over 40 investment professionals and 60 back office staff.  It means can these investors do what you need them to do.  Can they run some meetings with you, can they introduce you to other investors, can they open up doors with some strategic potential.  When they open these doors do they have credibility?  That is probably the most important thing an investor can do for you as a Smart Investor, they can actually do for you what you can not do for yourself.  Investors sometimes take for granted that you know your business, you know your technology, you know your sector better than us.  That is why you are doing it.  But once you get to a certain size you NEED assistance, so find investors that can actually help you and are interested in you.  Will this investor pick up the phone or even fly for you?  This is a very honest conversation you should have once you are looking for that “Smart Money”.

David Kim
David Kim

David Kim, after several years of pioneering in the Internet and technology space in the US and throughout Asia, currently serves as the Chairman of Animoca Corporation, one of the largest mobile app developer and publisher in the world with its affiliate listed in Australia (ASX:AB1). Concurrently, he manages and oversees several financing and advisory projects ranging from private equity investments to refinancing of distressed assets. He is the Managing Partner at NP Equity Partners.

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