Having a strong set of skills from various experiences greatly helps when working at a CVC because it allows you to understand the startups' nuances and align them with the mothership's strategic vision. 
Samsung’s Odyssey of Innovation and Strategic Growth
May 15, 2024
Interviewed by Nicolas Sauvage on October 27, 2022
In the dynamic landscape of corporate ventures, Samsung Ventures has emerged as a pioneering force, channeling investment prowess into startups and companies that align with Samsung Group’s core businesses. With a commitment to staying at the forefront of technological advancements, Samsung Ventures seeks to foster innovation and expand Samsung’s reach in consumer electronics, mobile technology, and enterprise software. At the heart of this endeavor is Jihong Kim, Managing Director at Samsung Ventures. Corporate Venturing Insider viewers benefitted from Jihong’s insights based on his experience within the ecosystem.
A Personal Journey
Jihong’s journey traverses a diverse spectrum of disciplines, beginning with his educational foundation in electrical engineering and computer science at UC Berkeley. After embarking on a career as a software engineer, he transitioned into management consulting at PwC, gaining valuable insights into business operations. His trajectory further evolved as he ventured into the realm of finance, becoming a research analyst at a hedge fund. Drawing from these varied experiences, Jihong joined Samsung Ventures over a decade ago, catalyzing a trajectory marked by multiple promotions internally. Within Samsung Ventures, his focus predominantly centers on consumer electronics, mobile technology, and enterprise software sectors.
The blend of engineering, consulting, and financial expertise provides him with a nuanced understanding of startups’ businesses and products, ensuring informed investment decisions. Furthermore, having a background in sales and marketing equips him to assess the potential synergy between the startups his team is analyzing and Samsung’s operations, shaping strategic investments and alignment with the mothership, a skill crucial for the success of a CVC.
Strategic Framework
Central to Samsung’s innovative strategy are its two primary business divisions: semiconductors and mobile consumer electronics. Within these domains, the Open Innovation Centers play a key role. Samsung Strategy Innovation Center (SSIC) and Samsung NEXT, established around a decade ago, engage in activities ranging from mergers and acquisitions (M&A) investments to partnership and incubation efforts.
“Samsung is a very big organization and there are so many activities that are taking place,” Jihong explains. “Sometimes it’s hard for a single organization to cover everything that needs to be covered and when we are making investments we work fairly closely with the business units to determine our investment candidates.”
Samsung Ventures collaborates closely with these divisions to identify investment prospects and potential partnerships that align with the company’s future objectives. The interplay between Samsung’s venture capital arms and business units is orchestrated to achieve a seamless integration of innovation.
Diversity within Investments and Strategies
Diversification is the cornerstone of Samsung Ventures’ investment strategies. Over the years, they have established around 60 funds, spanning varying sizes and industries. The funds, catering to different business units of Samsung, encompass domains such as semiconductors, mobile technology, construction, environmental, social, and governance (ESG), life sciences, fintech, and insurance tech. Each fund is dedicated to a specific limited partner (LP), aligning the investments with Samsung’s overarching business goals.
“Although all of our LPs are in different business sectors, when they decided to form a strategic investment fund with Samsung Ventures, they wanted to be deployed strategically,” says Jihong. “So I would say they have a lot of commonalities there in terms of how they want their fund to be used and deployed.”
A distinctive characteristic of Samsung Ventures’ structure is its General Partner Limited Partner (GPLP) setup with carry. This structure ensures that the investment team responsible for a particular fund reaps the rewards of its success. Despite this, all carried interest and fees are consolidated at the corporate level.
The Value of Synergistic Growth
As mentioned throughout the conversation, because Samsung is such a large company, the synergy between all the units is more crucial than ever, and strategic partnerships are a cornerstone of Samsung Ventures’ ethos. While the majority of their endeavors focus on strategic investment initiatives, they have also established a dedicated fund that operates independently of Samsung’s business units. This special fund, active for over a decade, has generated three fully deployed funds with a fourth in the pipeline already.
Jihong emphasizes that regardless of whether the investment stems from strategic or financially motivated funds, the support provided to entrepreneurs remains consistent. Once a startup becomes a part of the portfolio, Samsung Ventures collaborates with them, seeking growth and win-win opportunities within Samsung’s ecosystem. This collaborative approach underscores the commitment to fostering synergistic growth.
“CVCs are unique because we provide capital, but there are other additional values that we can provide on top of the capital,” explains Jihong. “So if we can do that together, then it’s going to be quite synergistic and meaningful to the startup community.”
The venture capital arm brings specialized expertise in identifying and nurturing innovative startups, thereby diversifying the parent company’s portfolio and driving potential high-growth opportunities. Concurrently, the mothership provides valuable resources, industry insights, and an established market presence that can accelerate the growth and success of the startups. This collaborative dynamic fosters knowledge sharing, risk mitigation, and operational efficiencies, enhancing the overall competitive advantage of both entities.
Navigating Strategic Terms and Innovation
In the intricate world of venture capital, strategic insights can often be the differentiator that propels a startup toward exponential growth. Side letter agreements serve as a conduit for these insights, providing startups with a window into Samsung’s strategic vision. These insights encompass a diverse spectrum, ranging from market trends and emerging technologies to opportunities for M&A that align with Samsung’s strategic objectives.
As startups gain access to these insights, they are empowered to align their roadmaps with Samsung’s future direction. This alignment not only enhances the startups’ decision-making processes but also positions them favorably within the industry’s evolving landscape.
By leveraging specialist funds, forging strategic partnerships, and embracing diversity, Samsung Ventures continues to shape the future of technology and drive Samsung’s evolution in the ever-evolving world of business.
Through the strategic framework of collaboration with Samsung’s business divisions and the diverse spectrum of investments, Jihong’s CVC is clearly one to watch.
