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Jafco Offers Venture Capital for Start-Ups

Posted June. 23, 2005 06:04,   


Jafco Invests in Potential-

Funding is the biggest concern facing start up ventures at earlier stages. Indeed, it is a daunting task for a company with zero revenue to find an investor.

Jafco is a specialized venture capital firm investing in these startup companies. It understands that businesses with high risks can bring huge profits when they are successful. It doesn’t hesitate to offer funding to businesses which have nothing but ideas when it can prove the feasibility of technology behind the ideas. Few venture capital firms based in Korea do business in this way.

Up until now, Jafco has invested 50 billion won in 22 Korean venture companies since 2002. About 40 percent of them had no revenues whatsoever, and three had just been set up when Jafco invested in them.

Jafco’s investment decisions may seem reckless, but they are based on the rigorous evaluation of growth potential and capacity of management.

Jafco invests only in technologies which can appeal to the global market. The technology it invests in should have a market with high growth potential. But what Jafco pays even more attention to is the decision making capability of CEOs and future potential of businesses.

Moreover, Jafco Korea’s investment decisions are subject to deliberation by Jafco Asia, the company’s Asian headquarters. It should be a unanimous decision. Any small doubt means no investment.

In this way, Jafco has invested in 3,000 companies worldwide, and about 800 out of them became listed companies and merged or acquired.

Jeong Ui-cheol, the president of Jafco Korea, said, “Because we invest at earlier stages, the success of only two out of 10 companies brings us huge profits.”

Jafco Takes Advantage of Its Global Networks-

Jafco was founded by the Nomura Research Institute, a renowned Japanese economic research institute, in 1973. Becoming independent of the institute, the venture capital firm has made inroads into the global market by diversifying its operations into Jafco Asia, Jafco America and so on.

This global network has served as a major pillar behind the success of companies it invests in.

For instance, Jafco helped “Integrant Technologies,” a domestic venture company manufacturing receiver chips for satellite DMB, to sell chips to a Japanese satellite DMB terminal manufacturer. Jafco introduced them to each other so that the Korean company could sell source technology to the Japanese one. As such, the companies invested in by Jafco share technology, accelerating their mutual growth.

President Jeong said, “Some are raising concerns, saying that the Japanese capital firm buys up Korean companies. In fact, it is here to help Korea export its technology overseas, including Japan,” adding, “This is a win-win relationship. Jafco makes money only when the company it invests in succeeds.”

Sang-Hoon Kim Do-Young Kim sanhkim@donga.com nirvana1@donga.com