South Korea-based electronics conglomerate LG is among local corporations considering starting a local corporate venture capital unit based on a regulatory change passed in the country at the end of 2021.
The regulatory changes enacted from 30 December are understood to only affect groups with a holding company structure, such as LG, for Korea-based CVC units. LG already runs US-based LG Tech Ventures under CEO Dong-Su Kim, who said it was considering starting a Korea-based CVC after the rule changes.
The changes allow these corporations to invest directly in external startups rather than use CVC units run at arm’s length as affiliates.
Woong-Jo Woo, vice-president at Lotte corporation and head of its healthcare team, said: “In Lotte, we already have Lotte Ventures in place for seeding and series funding for innovative startups. With the new regulation change, it would [be a] help to new corporate business development, such as healthcare. New businesses could be effectively incubated within holding companies by investing in strategic partners directly.”
Korean corporations, called chaebols, including Samsung, Hyundai Motor, Lotte and Kolon, tripled their investment in venture companies in 2021 through their affiliated CVC units, according to Business Korea, which reported on the regulatory changes and said about 10 business groups, including LG, GS and SK, were setting up relevant units as a result.
