| Kakao's most popular character Ryan / Courtesy of Kakao |
By Kim Hyun-bin
Naver and Kakao have been in fierce competition to invest in startups, with the hope to bring firms with high growth potential to their side to fuel future growth.
Naver through its affiliate Naver D2SF invested in 20 startups, while Kakao invested in 15 this year alone and more is expected to come before the year end, officials said, Friday.
The amount invested in each startup has not been unveiled but it's been told hundreds of million won to billions of won have been invested in each startup. The amount is not substantial but the startup industry welcomes such capital from strategic investors such as Naver and Kakao, as rumors of their investments will prompt more investors to get onboard.
The two IT powerhouses have invested in diverse fields including in blockchain, artificial intelligence, digital health and robotics.
Overlapping investments were made in four startups between Naver and Kakao in AR commerce startup Reconlabs, digital health firm Emocog, AI information platform Ssum and distribution robot firm Floatic. Industry watchers say it is unprecedented for two competing IT firms to simultaneously invest in the same firm.
Naver and Kakao aims to find startups with high growth potential and later conduct an M&A once the startup shows signs of growth.
“It is common for IT firms to invest in startups early on and once the company starts to show success they either acquire the company or buy more stakes to obtain over 50 percent of the company so it will be under their jurisdiction,” an industry official said.
After the establishment of Naver D2SF in May 2015, the company invested in 70 startups with its corporate value reaching 1.3 trillion won ($1.1 billion).
Naver and Kakao investment strategies slightly differ from one another. Naver has been focusing more on the technological aspect. Kakao has been aiming to acquire not just the technology but to find new content platforms that could create synergy with their existing businesses.