Dress for Success: The Traits Needed to Make Successful Startup Investments
On the live talk show 'Come Up 2022 EO', GFT CEO Jay Eum, a venture capitalist who invests in emerging technology companies, shared his startup investment experience in Silicon Valley, a major hub for startups.
If You Can't Beat Them, Join Them
CEO Eum worked at Vertex, a famous global venture capital firm that invested in PayPal and other leading companies. At the time, he thought understanding startups was essential for being a good investor, so he volunteered to work for his one of his portfolio's companies in the Asia sales department.
What is the Key to Success as a Venture Capitalist in Silicon Valley?
Eum said investment decisions could be easy. That’s because when startups perform investor relations (IR), startups with good technology and manpower naturally attract investors’ attention. Thus, we must put more effort into persuading such promising companies to accept investments. Eum also remarked that the most important things to look for in a startup are 'reputation' and 'specialty'.
Just as investors do not invest by looking at pitches alone, startups also choose investors based on investor reputation and references from previously-funded startups. This 'reputation' is determined by not only startup investment but also follow-up support activities, such as efforts to utilize various networks and provide resources. Just like how keys are unique, investors also need to bring something new to the table.
Eum's 'specialty' was his vast network; he had the capability to connect Asian IT customers and partners. He could build a good reputation for a startup, even in the fiercely competitive battlefield of Silicon Valley. This Asia network was something special as even prominent Silicon Valley investors like Sequoia Capital did not have this network, and this advantage allowed Eum to succeed as a Silicon Valley investor.
Why Do Global Conglomerates Discover and Invest in Startups?
These days, we often hear news about Corporate Venture Investment (CVC) or M&A in the startup industry. We could learn more about why large corporations invest in overseas startups through Eum's experience as the CEO of Samsung Ventures' US branch.
Unlike venture capitalists and financial investors who only withdraw funds after investment, global conglomerates discover and invest in startups that will fill gaps in products and technologies. Essentially, conglomerates invest in startups to bring innovative products to market faster than competitors. Eum explained that thanks to discovering and investing in technology-based startups in Silicon Valley, Samsung can upset Japan's 30-year hold on the TV market. In addition, he explained that large corporations establish long-term strategies by utilizing insights on future needs while discovering and introducing startups in the emerging technologies field.
Two Traits of CEOs That Win Investments
Business is ultimately determined by money and people. Still, at a very early stage, Eum said he decided to invest by focusing on people. He shared two characteristics of a typical CEO that attract investment.
The first is intelligence. An intelligent CEO refers to an outstanding person who can solve problems and pioneer the market in any situation. Eum said these entrepreneurs have good timing and market awareness, which ultimately lead them to success.
The second trait is charisma, attracting money and people. Even if an entrepreneur is brilliant, he will still need to have a silver tongue in order for his offerings to gain traction. In Silicon Valley, Eum has witnessed successful CEOs, such as Elon Musk, CEO of Tesla, who is both intelligent and charismatic. Thus, Eum stated that even in Korea, where he meets entrepreneurs with the potential to succeed in the global market, he can identify successful entrepreneurs based on these two traits.
Should Emerging Technology Startups Only Focus on Developing Technology?
Regarding technology and the market, Eum stressed that emerging technology startups' technological prowess is essential. Still, no matter how good the technology is, it is meaningless if it cannot grasp customers' hearts and does not fulfill a niche in a market. He said that whether it's B2B or B2C, an emerging technology startup needs to have customers.
Is Now the Right Time to Start and Join a Startup?
Eum advised that the current downturn in startup investment could be a good opportunity for new entrepreneurs; he said that the current hiring situation might be a better time to secure technical engineers, and many success stories of startups began in recessions.
However, he cautioned that it would be necessary for those looking to join a startup to check whether the company could attract additional funding. He said that venture capitalists are now shifting their focus from startups to providing additional funding to existing investors with solid business models that can generate returns.
What are Your Future Plans?
GFT Ventures, headed by Jay Eum, is an emerging technologies investor who looks for startups with world-class technology and is known to have invested in domestic startups, such as one with truck-based autonomous driving technology.
At the end of this talk show, he said that he would continue to discover promising startups from the perspective of a prominent investor.
I want to thank CEO Jay Eum for sharing his valuable global investment experience at this online event and CEO Taeyong Kim for preparing questions on behalf of the founder.