Where’s the Money: why Korea’s US$2 trillion private wealth is flowing from Seoul to Silicon Valley

For Naver Corp, which Kim describes as “strategic capital”, this creates opportunity rather than constraint. “We can take advantage of the [supposed] winter,” he says. “We have the capital to invest when everyone’s holding back, so we can make more aggressive bets.”

This perspective shows a widening gap between financial VCs—typically following fund cycles, LP expectations and exit timelines—and corporate venture arms with patient capital and strategic objectives. The latter can invest countercyclically, a luxury that becomes a decisive advantage when peers are retrenching.

Kim’s career trajectory in finance mirrors the broader transformation. After years on Wall Street, stints in Hong Kong private equity and leading private equity operations in Korea, he now oversees global investments for Korea’s technology incumbent. He is also the CEO of US-based social commerce platform Poshmark, following the company’s largest-ever acquisition at US$1.2 billion which closed in 2023. 

Where is the money going? Are funds particularly interested in AI companies?

Namsun Kim (NK): Naver Corp has always focused on enterprise software, fintech and e-commerce. Those are probably the three areas we will continue to focus on. As a corporate VC, it’s different from typical financial VCs. We have more degrees of freedom. You’re not only trying to gain financial return, but there’s also strategic value to what we invest in. We want to learn, potentially partner with the parent company and build an ecosystem. We’re also in it for the longer term; we understand how businesses are built and run and have patience.

For AI specifically, we don’t think of AI as an investment class itself. It’s a paradigm. It’s like the mobile transition. You had traditional companies that were left behind and mobile native companies that were born during that era. The same thing is happening now.

AI native companies were born around or after ChatGPT. Traditional companies, like Google, are trying to figure out how to catch up because they weren’t necessarily AI native. But Google was conducting AI research early on, so it was ahead of the curve. Other companies have to figure out how to harness AI to stay relevant.

I actually think the whole AI cycle is much more sustainable than the dot-com bubble. Back then, if you had 100 companies, 99 would fail and one would succeed. We think that during the AI transition, out of 100 companies, more will succeed because the opportunity size is much larger.

Read more: From angel to unicorn: Airwallex’s Lucy Liu’s US$1 million bet that built a US$6.2 billion fintech company

What broader trends are reshaping the VC landscape?

NK: You’re going to see a bifurcation in the market. Venture capital has always been small in terms of fund size, like several hundred million. Now you have these giants emerging like Sequoia. The larger funds are becoming larger and larger. They’re playing the volume game, which is kind of new, and that’s why it’s getting harder for newer funds to raise capital, because it’s really concentrating on some of the larger managers.

How do you see start-ups responding to the current situation?

NK: Ten years ago, start-ups in Korea never thought about going outside. Now, they’re all relocating to San Francisco because they know that’s where the capital, talent and customers are.

European startups realise that unless they win the US market, they’re not going to grow or be unicorns. Israeli startups—that’s a big centre of talent—they’re trying to go to New York. That’s where they know all the action is.

The capital was always there in Silicon Valley. Yes, consumption went down during the Covid-19 pandemic because people weren’t living in the city anymore. But the capital and activity are still there. You have so much AI startup activity. Occupancy rates of offices are going up again. It’s coming back.

Our vision is not about trying to conquer the world. We pick our battles. A lot of the companies in Korea are trying to expand abroad, so we’ll help them and provide the tools.

For example, with Poshmark, we’re going to start selling K-beauty, skincare and beauty products. That’s new for the platform. It’s going to help up-and-coming Korean brands because distribution in the US is pricey. Other platforms take a ridiculous fee and marketing can be expensive. If we can provide that platform for them to distribute, that’s in line with our vision and philosophy.

Read more: Why slowing down is the future of beauty, according to KraveBeauty founder and YouTuber Liah Yoo

Why did Naver acquire Poshmark?

NK: We wanted to do e-commerce, which makes up half of our business, but we’re not going to compete with the Amazons of the world. So we looked at the vertical and category, and a theme that we found interesting.

We had a belief in the structural trend around the circular economy, Gen Z and vintage. We thought that this was a big movement. Gen Z is thinking less about new, and more about circular and recycled. Older styles and fashion often resurface. You’re looking for that Louis Vuitton bag from 2005. That sort of thinking didn’t exist ten years ago. Previously, people weren’t that open to buying pre-owned clothing, but we’ve seen that Gen Z don’t care. For them, “Vintage is cool.” If I'm trying to buy something you can only find on the streets of Harajuku in Japan, it doesn’t matter that someone else had owned it before, because that’s how I can buy it at a more attractive price.

We thought those community dynamics were unique, and this could be a vertical where we can gain big market share. So we looked at the companies and competitors that were doing this, and Poshmark was the best in class. Europe had alternatives like Vinted, but Europe is a collection of more than 40 countries, whereas Poshmark is in the US, which is one big market. We found that to be very attractive. That’s why we acquired them.

Read more: More than pride: the economic influence of the LGBTQ+ community

What are the long-term implications of the current funding environment?

NK: What you’re seeing now is due to the rise of AI. Silicon Valley has become the centre of innovation, and you have so much capital in Asia; private wealth that wants to go elsewhere. Especially in Korea, it is over US$2 trillion of private wealth that, in the past, used to only invest across Asia in real estate. Now, they want to invest in Silicon Valley. They want to invest in the cooler stuff, but don’t have access to it.

A few years ago, when I was in investment banking and private equity, there were two clear distinctions: Asia was Asia, the West was the West. There was capital from around the world trying to invest in Asia, and at the same time, we were trying to compete to get capital into the same region. Now you have so much private wealth, but it wants to go out. No one’s really brokering that. No one’s introducing them to the right opportunities.

Asian investors are becoming more sophisticated and want to have access to the better returns and opportunities—the OpenAIs of the world, those [types of] investment opportunities. We’re realising that Asian capital was never a big player in the global capital markets. It always came from the West. All this capital here is being reinvested into ourselves and not going elsewhere. We’re figuring out that we don’t only have to reinvest in Asia—it can go elsewhere, too.

What should startups be focusing on in this current situation to raise funds?

NK: Nothing has changed: find product-market fit. In developed Asian countries, the consumer and customer behaviour is not very different. For example, I always say that in Japan, Korea and the US, the average consumer’s behaviour and preferences are very similar.

If you can win the customer in Korea over, it’s not like there’s some secret sauce in the US. If you can’t do it, you’re going to struggle even more over there.

Don’t think about the US as the solution to your growth problems. If you’re ambitious and you know you have a product that will succeed, then attack the larger market. But you first have to achieve product-market fit.

NOW READ

Where’s the Money: what it takes to get funded in the Philippines’ tougher, smarter VC scene

Godfather of AI: we need AIs that ‘can’t bear the sight of us suffering’

From rage to radical empathy: activist and astronaut Amanda Nguyen’s lessons on fighting for change