After reading 'Startup Investment Attraction Strategy'.

After leaving the investment banking industry and transitioning my career to Big Tech, I've picked up a book on investment practice after 20 years. It was both heartwarming and insightful to revisit this area of expertise. I was happy to be reminded of all the knowledge I've acquired over the years. More importantly, the author and editors' efforts to make startup investment accessible and relatable were evident in the book, making it a heartwarming read. I also realized that I may not have made as much effort to impart knowledge to my juniors as they have. I felt a little ashamed of myself.

I've been primarily involved in B2B pricing, contracts, and negotiations at Microsoft and Salesforce since my last experience managing a national fund for mid-cap companies listed on KOSDAQ. As a result, I'm still unfamiliar with startup investment. While in Singapore, I had the opportunity to interact with professors, entrepreneurs, and VC investors in the entrepreneurship field, expanding my network. However, I haven't had the chance to see how they are actually making their mark in the real world. Ironically, Singapore, where capital is more readily available than anywhere else in the world, seems to favor family offices focused on real estate investment rather than Venture Capital, possibly due to the abundance of other financial products and investment opportunities. It appears that the government here is also very generous with investments in early-stage startups due to its strong capital management capabilities. This could be why there are also quite a few companies that don't manage to cross the chasm. As the book mentions, it's not a field where money alone can solve everything.

However, the logic of capital still remains 'maximizing investment value'. This also means that finding investors can be relatively easy if there is a strong prospect of value maximization. As more and more Korean startups are considering expanding into overseas markets, I started to wonder how I could contribute. This is where my reading began.

One aspect that appeared hopeful was this: 'A startup's long-term goal should not be mere survival, but rather to grow significantly while providing genuine value to its customers.' The meaning of value varies depending on the participant. For VCs and most investors, it would be monetary value (mostly derived from future value based on growth rate). For some advisors, it might be the sense of accomplishment of having helped a company grow. For government agencies, it might be a strategic move to expand the industry ecosystem. Since this book is about investment attraction strategy, we will first limit that value to monetary terms. The book also considered the purpose of investment attraction to be securing funds to acquire resources for aggressive market penetration. Around 2005, when I first joined Microsoft, the company and Google were in the midst of building large-scale data centers. My decision to change industries was also driven by the fact that there was no company at the time that could demonstrate such high operation cash flow, market dominance, and operating margin from the perspective of an investment analyst. The expectations have now been realized with a stock price that is over 20 times higher than it was then. (Although for various reasons, I couldn't fully realize this profit as an individual.) This monopolistic position in the market also led to a phenomenon of excessive talent influx.

We can also see companies that are not startups (like WeWork) riding the wave of this trend. The definition 'an organization structured to discover a repeatable and scalable business model' was clear and helpful. Examining whether a business model meets this definition seems like a good starting point for investment approaches. One thing that struck me as unique was that investors were also involved in managing the founders' mental state. It's like executive coaching, and I myself have experienced how important leadership coaching is to organizational management. When I imagine the pace of change and decision-making conflicts that founders experience when building an organization from scratch with little experience, this aspect, which is not reflected in quantitative indicators, seems to be very important.

Also, considering that Singapore and London, which particularly emphasize IRR, are unlikely to invest in the long term, I think companies expanding from Korea will be the target of mid-term investment. Companies that have entered their later stages or listed companies will already be targets of corporate investment banking. So, companies planning to expand overseas in the future should consider setting up their IR materials and contracts in advance, as long as the workload isn't too burdensome. In this case, they should aim for a 1.5 to 3 times multiplier, while also making sure that foreign capital doesn't become a cherry picker. Since the investment perspectives of large companies and startups differ, it was also great that the book provides a very detailed guide on writing IR materials. When I saw the opinion of a VC investor here in Singapore that they rarely see companies that genuinely consider overseas expansion when they see presentations at D-Camp and other events, I felt that there are barriers for Korean entrepreneurs beyond just capital when it comes to expanding abroad. Looking at Market Kurly, even here in Singapore, it is only conducting business within a limited scope.

Over my years working overseas, I've seen how much Korean workforce capabilities and determination have been proven. But I've often observed that their market adaptability and responsiveness are relatively weak. I don't know if this is due to the presence or absence of intercultural intelligence, or if it's because they limited their service addressable market to Korea from the product development stage. However, seeing that even mega ITC players from China don't have much noteworthy performance overseas, there's definitely a difference between the Asian and global markets. However, considering the difference in the size of China's and Korea's domestic markets, I think overseas expansion by domestic startups is a necessary proposition sooner or later, but this is something that needs to be verified.

The book also provides an excellent overview of the details to be aware of when it comes to term sheets and contract signing. These are things you can only learn from experience, and it's not easy to gain that experience beforehand. This is also an area that's easily overlooked under pressure during negotiations. I was also encouraged by the inclusion of a section on ESG (impact) investment. If I get to contribute in the future, I definitely want to focus in this area. I'm a little disappointed that I couldn't participate in the first session due to my return schedule, but I'm looking forward to lively discussions from the second session onward.