Tel Aviv, the economic capital of Israel, is home to 400 R&D centers of world-class technology companies such as Google, Apple, and Qualcomm. A small country with a population of less than 10 million has emerged as a global start-up country with the public-private parental fund “Yozuma” (“creativity” in Hebrew, “start”) fund. The Yozma Fund supported hundreds of venture start-ups in the 1990s and attracted R&D centers of global companies under the direction of Igal Errich, chairman of the Israeli Prime Minister’s Office, who served as chief science officer (ministerial level). The Yozma Group’s annual assets under management amount to about 4 trillion won.
![Tel Aviv, Israel, where R&D centers of global technology companies are gathered [사진 요즈마그룹코리아]](https://i0.wp.com/pds.joins.com/news/component/htmlphoto_mmdata/202102/23/875c24c2-1471-45b1-9114-2567dd7066e4.jpg?w=560&ssl=1)
Tel Aviv, Israel, where R&D centers of global technology companies are gathered [사진 요즈마그룹코리아]
When such Yozuma Group opened a liaison office in Korea in 2013, the domestic founding industry had high expectations for the emergence of Jewish capital. Two years later, the office became a Korean corporation. It was around this time that Lee Won-jae, 37, the head of the Korean subsidiary, received attention. His history of growing up in Israel since the age of twelve following his mother who was studying for a doctoral degree in comparative religions at Hebrew University was a fresh wish to “translate the secret to success of Israeli-style startups” to the domestic venture capital (VC) industry. However, there was no news that Yozma Group made a’large-scale investment’ in Korean startups for 7 years.
On the 9th, I met Lee Won-jae at the Yozma Group Korea office in Gangnam-gu, Seoul. It was the day when news that Yozma Group’s 3rd shareholder and SK Telecom’s 2nd largest shareholder,’Nanox’, a digital imaging medical device company, purchased 3,600 pyeong of land in Yongin, Gyeonggi-do to build a production plant. Nanox is an Israeli startup that was listed on the NASDAQ in August last year. It has a technology that has reduced the exposure time of X-ray radiation to one-half of the time and lowered the cost of imaging to the previous 10% level. The stock price soared 255% compared to the public offering price ($18) within three weeks of listing, and then fell 40% after two months. Short-selling investment institutions raised suspicion that’there is no real substance of technology’. Two months later, in December of last year, Nanox demonstrated the equipment in person, and the suspicion was resolved.
Lee Won-jae, CEO of Yozma Group’s Korean branch, holds an interview with JoongAng Ilbo at the office in Nonhyeon-dong, Gangnam-gu, Seoul. Reporter Kim Sang-sun
“Investment by US institutions…Sufficiently alleviated the suspicion of Nanox”
- I can’t stop talking about Nanox. The situation is now.
- Arc Investment (about 70,000 shares), which examined Tesla’s technology, and Black Rock (about 190,000 shares), the world’s largest asset management company, also bought Nanox shares. Citron, which published a short selling report, deleted the report in October. It was a malicious attack. The fact that conservative American institutional investors moved is evidence that the technology has been proven. Now Nanox is investing 40 million dollars in recruiting manpower, investing in startups, and expanding facilities, using Korea as its production base. This is the first example of a proper cooperation between Korean and Israeli companies.
![Nanox employees working on digital X-ray equipment'Nanox Arc' [사진 요즈마그룹코리아]](https://i0.wp.com/pds.joins.com/news/component/htmlphoto_mmdata/202102/23/06fa2b7d-27ed-4435-9e01-f9ffec25bd15.jpg?w=560&ssl=1)
Nanox employees working on digital X-ray equipment’Nanox Arc’ [사진 요즈마그룹코리아]
“Support Korean manufacturing companies by matching Korea-Israel”
- It is the 7th year since Yozuma Group established a Korean subsidiary. Isn’t there any remarkable performance compared to the size of the group?
- ‘I thought you were going to invest in combat, but didn’t you?’ I heard a lot. Everyone was puzzled. Honestly, it has been two years since I started investing in earnest. At the beginning, Chairman Ehrlich said,’Do not invest in the next few years.’ It was instructed to study Korea first and build networks first. In fact, no matter how good a company was introduced to the head office, the investment was not approved. Then, the investment was approved in 2018. In the past two years, the Korean subsidiary has invested about 147 billion won. The average internal rate of return (IRR) is 86% and the cumulative number of funds is 23.
- Did you find an investment strategy suitable for Korea?
- Yes. Through Nanox, I experienced the greatest synergy when creating a joint venture (JV) by putting Israel’s innovative technology and Korean manufacturing technology in one basket. In March, a growth fund for medium-sized companies worth 100 billion won will also be launched. It is the flagship project of this year that connects Israeli technology companies with domestic companies that are thirsty for new technologies such as new and renewable energy, batteries, and artificial intelligence (AI), although they have manufacturing power.
![Igal Errich, chairman of Yozma Group, and Lee Won-jae, CEO of Yozma Group Korea, are having a conversation. [사진 요즈마그룹코리아]](https://i0.wp.com/pds.joins.com/news/component/htmlphoto_mmdata/202102/23/f7e1df8f-c6ab-4fa4-9509-af9c1aaa9e2c.jpg?w=560&ssl=1)
Igal Errich, chairman of Yozma Group, and Lee Won-jae, CEO of Yozma Group Korea, are having a conversation. [사진 요즈마그룹코리아]
“Israel is a startup nation, Korea is a scale-up nation”
- Is the technology of Korean startups insufficient?
- Rather than that, I decided that it would grow explosively when Korea and Israel fill the’things that don’t exist.’ Israel knows how to commercialize technology by linking it with startups, but there is no manufacturing technology. It makes from 0 to 10, but it doesn’t advance to 100. On the other hand, Korea is excellent at R&D, but that’s all. The thesis has great skills, but you can’t make money. However, manufacturing power,’Made in Korea’ is a high-level technology that is recognized worldwide. When I baton touched Israel’s technology in Korea, I could make 10 to 100. Israel is a nation that is strong in startups (beginning), and Korea in scale-ups (expanding).
- What specific plans do you have?
- This year, more than 7 Israeli companies are preparing for NASDAQ IPO through cooperation with Korea, including linking with Korean manufacturing technology. They are companies in the field of artificial intelligence (AI), mobility, information technology (ICT) such as robot automation, bio-healthcare and medical devices, and low-carbon and battery-related green energy companies. I think the 2nd and 3rd Nanox could come out. As for green energy, the entire group is strengthening the standards of ESG (corporate environment, social, and governance). Quantitative indicators are being developed to evaluate ESG in the investment screening stage.
Lee Won-jae, CEO of Yozma Group’s Korean branch, holds an interview with JoongAng Ilbo at the office in Nonhyeon-dong, Gangnam-gu, Seoul. Reporter Kim Sang-sun
“Korea is a bio-powerful country…to go global beyond domestic demand”
- Other than the joint venture (JV), there are other plans.
- Of course, it also fosters Korean startups. It is mainly a bio company such as WellMarker Bio and Synteka Bio. Korea’s technology, where Ehrlich lives the highest, is bio. This is because, over the past decades, bright talents have flocked to medical schools. In the past, doctors and pharmacists used to be professions for life, but now they start business. Even in the history of global pharmaceutical companies, the joining of outstanding medical staff is the most important key to the success or failure of a bio startup. This is why Yozma Korea has been investing mainly in bio-startups so far.
- Finally, if you advise the domestic entrepreneurship industry.
- Israeli companies quickly read technology trends through global R&D centers scattered around them and start looking at the global market from the beginning. In Korea, many unicorn companies are also B2C companies that have started looking at the domestic market. However, the Korean market is small. If it is difficult to advance overseas, it would be nice to go global even by finding a local partner who could mix blood. The government believes it is time to actively attract global R&D centers and foster’star technology stocks’ with international patents through accelerating funds.
Reporter Jeongmin Kim [email protected]