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[Herald Interview] ‘Long-term views are critical to survive crisis like coronavirus’

Mirae Asset Venture Capital gauges right timing to exit some of its portfolio companies in H2

Chae Jung-hoon, managing director of venture capital firm Mirae Asset Venture Investment (The Korea Herald / Kim Young-won)
Chae Jung-hoon, managing director of venture capital firm Mirae Asset Venture Investment (The Korea Herald / Kim Young-won)


Since its first outbreak was reported in South Korea in January, COVID-19 has been wreaking havoc on the nation’s economy, forcing factories to suspend operations and claiming jobs in a wide range of sectors. The investment segment has also been affected as face-to-face meetings have been delayed or called off over growing concerns of infections.

In times of crisis such as the ongoing coronavirus pandemic, investors need to maintain long-term perspectives, according to Chae Jung-hoon, managing director at venture capital firm Mirae Asset Venture Investment.

“In this highly unstable and unpredictable market, only those who make discreet and long-term investments can weather the storm,” Chae said in an interview with The Korea Herald.

Such a long-term investment strategy is part of Mirae Asset’s core investment principles.

The venture capital unit under asset management firm Mirae Asset Financial Group invested in big data firm Daumsoft approximately two decades ago, betting on the potentials of the management and developers of the company. The VC to this day holds 3 percent stake in the big data company.

Deemed one of the top-tier players in analyzing trending keywords online with artificial intelligence systems, Daumsoft is scheduled to make its debut on the nation’s main bourse Kospi this year, with its market value estimated to reach 100 billion won ($81 million) when it goes public.

Although the local VC had planned to withdraw its investments to make profits from listed firms, it delayed the exit scheme due to the extremely tumultuous stock market for the past several months. It is currently gauging the right timing to exit some of its portfolio companies, in which Mirae Asset invested some years ago.

The VC said it will take a cautious approach in making profits by withdrawing its investments as the real economy could take a serious hit in the latter half due to the ongoing coronavirus crisis.

“Mirae Asset will not hurriedly try to withdraw its investments from its portfolio firms, but the latter half this year will be a focal point for many, including Mirae Asset, to decide whether to resume exit schemes or not,” he said.

Despite serious economic impacts caused by the potentially killer virus, the VC market has been remaining resilient, continuing to look for disruptive technologies and startups, according to the Mirae official, who has worked in the investment sector since 2000.

“Even in February and March when the coronavirus crisis peaked, the VC market has fared pretty well without losing its momentum,” said Chae, who heads the venture investment unit at the firm.

In the first three months this year, local VCs made new investments of some 746.3 billion won in total, down just 4.2 percent on-year. The decline is relatively moderate, considering the sharp drop of stock market indexes and falling profits of traditional conglomerates here -- the Kospi index fell by nearly 30 percent in the first quarter from a high of 2261.57 points on January 17 to a low of 1626.09 on March 19.

Among Mirae Asset’s portfolio companies are: Backpacker, which runs handcraft marketplace platform Idus; home interior services firm Today House; and hobby-based social networking platform operator Class101, to name a few. These companies, which have already garnered a great deal of reputation as next unicorns in Korea, are based on mobile services. They are appealing to investors and users especially when untact -- non-face-to-face contact -- services are preferred over offline services due to the virus pandemic, Chae explained.

In addition to online services, he said, the VC has been paying keen attention to manufacturing companies, such as gas detector manufacturer Senko, fine dust detecting system developer Samyoung S&C, and solid-state drive producer Novachips, all of which are spearheading their respective industries. The gas detector firm is planning an initial public offering this year while the SSD manufacturer, which supplies storage drives to US defense firms, is expected to go public next year.

Mirae Asset is also eyeing opportunities in the overseas market. Chrono24, a Germany-based ecommerce platform for secondhand luxury watches, and chip design firm SiFive are some of those global startups being backed by the Korean investment firm.

One of Mirae Asset members, who has a great interest in high-end watches, cold called the then fledgling German luxury watch retailer some years ago to make an investment offer of 2 million euros ($2.2 million) in 2017. Now leading the secondhand luxury watch market, the German company is receiving love calls from traditionally high-nosed watch makers around the world for partnership.

“Mirae Asset is trying to see things from different perspectives and find startups that stand out from the pack,” Chae said.

By Kim Young-won (wone0102@heraldcorp.com)
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