K-content fundraising startup helps sophisticated younger generation learn tips for investment
By Kwak Yeon-soo
|Funderful CEO Yoon Sung-wook / Courtesy of Funderful|
As in other industries, there are game-changers. In music, global sensation BTS became the first K-pop group to hit No. 1 on the Billboard Hot 100 singles chart last year. In cinema, Bong Joon-ho's "Parasite" made history as the first foreign language film to win the Best Picture Award at the Oscars, also in 2020.
The Korean entertainment industry's stronger presence in the global entertainment content market is also striking in over-the-top services. Netflix's hit series "Squid Game" set a fresh record this year as the global streaming giant's most-watched show.
Riding on the success of the Korean wave, entrepreneur Yoon Sung-wook founded the K-content investment startup Funderful, with the belief that Korean content holds the key to determining its future.
Funderful is a platform through which individual investors can invest online in various entertainment content.
The company's successful investment projects include TV Chosun's hit drama, "Love (ft. Marriage and Divorce)," the exhibition "Photographs by Yosigo: Holiday Memories" and the disaster-comedy film "Sinkhole"
Founded in 2019, the company received authorization from the Financial Services Commission in February this year and officially launched its service in March.
Yoon, CEO of the startup, said that Korean content was able to make a mark in the global content market owing to its sophisticated audience.
"Compared to other viewers, Koreans have high standards. They are quite straightforward in their feedback and even outsmart creators," he said during an interview with The Korea Times, Wednesday.
Starting his career at film production company Show East, which produced director Park Chan-wook's 2003 hit "Oldboy," Yoon built his career at the state-run Industrial Bank of Korea and crowdfunding platform Wadiz with a special focus on the cultural content industry.
|Earlier this year, Funderful raised a total of 217.2 million won ($184,000) for disaster comedy film "Sinkhole," which attracted more than 2 million moviegoers and exceeded its break-even point. Courtesy of Showbox|
The so-called "MZ Generation," a combination of Millennials and Generation Z (those born between 1981 and the early 2010s), are the top investors at Funderful. For instance, the fantasy action film "Spiritwalker" and action thriller "Decibel" recently kicked off their fundraising rounds, and those in their 20s and 30s accounted for more than 65 percent of the investors.
"Most investors start with an interest toward Korean content and creators. They invest in a kind of cultural content out of the curiosity and desire to get involved in a project they like," he said.
Asked of the possible risks involved in investing in the content market, Yoon said that the traditional business rule of "high risk, high return" doesn't apply to his business, because the upper limit ceiling is relatively low compared to other businesses. He explained that individual investors are allowed to make online investments of up to 5 million won ($4,232) per project and up to 10 million won per year, following the Capital Markets Act.
"In our business, it's not an easy way to make a sizeable fortune because you're only allowed to invest small amounts. Plus, the tax rate is around 15 percent." he said.
Investors can earn profits depending on the success or failure of the content they invest in, and they gain a portion of a controlling stake.
"It usually takes from six months to a year and a half to determine the profit. Let's say you invested in a movie. It typically stays in theaters for two months and later goes to IPTV or VOD service and sells to foreign markets," he said.
Asked about the criteria by which he selects cultural projects to invest in ahead of the fundraising process, he explained, "We screen the content by reviewing the cast, writer and director and reading the script if necessary. But our primary concern is analyzing the lead investor and the production company's revenue structures to provide adequate and transparent information on each project."
Currently only registered residents of Korea (regardless of nationality) are able to join the service, but Yoon plans to make the service available abroad by partnering with local securities firms.
"We are planning to launch a global financing platform service, which will allow overseas investors to place subscriptions on Korean cultural content, including TV dramas, films, musicals and exhibitions. With an aim of opening the service in 2023, we are currently in talks with companies that offer mobile trading systems," he said.
The service may launch in Singapore first, the CEO added. He said that market access to Korean content ready for production could open doors to more investors around the world who have keen interest in the fast-growing cultural and entertainment market.
"Blockchain-based investments may allow producers to raise larger amounts of funds and investors could also generate more stable profits in the longer term," he said. "Our vision is to resolve the asymmetry of information on investments for individual investors and to provide stable financing solutions for production companies."
He talked about his long-term goal, which is to raise pre-seed funding and create a direct investment channel between content producers and consumers.
He forecasts that Korean cultural content will continue to increase its global influence in the future, provided that there are no major issues, such as a boycott movement of Korean pop culture or anti-Korean sentiment.
"When Squid Game was first released, the Korean media and viewers were quite skeptical. But it suddenly became a massive hit outside Korea through word of mouth. Then the entire sentiment reversed. It's the early adopters (about 15 percent of viewers) who lead opinions and the rest simply follow their example," he said.
"I'm pretty confident that the pie for Korean content will get bigger, because it has a proven record of producing interesting storylines and original elements."