Summary:
Kakao and Naver are shifting focus to global AI startups, particularly in North America, raising concerns about domestic funding
Naver Ventures invested in TwelveLabs, a Silicon Valley AI startup with backing from Nvidia and Samsung
Kakao backed FuriosaAI, a Seoul-based AI chip developer, and joined early-stage rounds for AI startups Tzafon and Trillion Labs
North America emerges as a key battleground, with Naver and Kakao investing in US-based AI and tech startups
Korean startups fear being left behind as capital flows overseas, driven by greater synergy and less scrutiny in the US market
South Korea’s internet pioneers, Kakao Corp. and Naver Corp., are intensifying their overseas investments in artificial intelligence startups, with a particular focus on North America. This strategic shift is sparking concerns among domestic startups about potential funding shortages at home.
After a two-year slowdown, both companies have renewed their startup investment activities, but with a clear global orientation. Data from Seoul-based tracker The VC shows that their investment pace has more than halved compared to the 20 startups annually backed during 2021–2022.
AI: The Key to Future Growth
Naver Cloud Corp., Naver's cloud computing division, recently led a Series A funding round for Urban Datalab, the developer of the AI medical platform MeDiAuto, investing 3.5 billion won ($2.5 million). Naver Ventures also made its first investment in TwelveLabs, a Silicon Valley startup with advanced multimodal AI technology, backed by giants like Nvidia and Samsung.
Naver's push into AI has gained momentum since founder Lee Hae-jin returned as chairman, emphasizing the need for strategic investments to compete with US tech giants. "We are in the middle of picking the right stone," Lee stated, highlighting the company's focus on innovative AI technologies.
Naver's in-house venture team, D2SF, has also been active, investing in AI-powered logistics, gaming, autonomous driving, and commerce startups. Similarly, Kakao has invested in AI chip startup FuriosaAI and joined early-stage funding rounds for AI developers Tzafon and Trillion Labs.
North America: The New Frontier
The shift towards North American startups has raised concerns among Korean startups, traditionally reliant on Kakao and Naver for early-stage funding. Of Naver D2SF's five 2024 investments, three are US-based, including 3D content developer Claythis and fashion AI startup YesPlz AI.
Kakao Ventures has also targeted US startups like FS2 (3D AI chip design) and Oligo Space (spacecraft design tools), while strengthening ties with the North American VC ecosystem. Naver has even opened a Silicon Valley office to scout growth-stage firms.
Industry observers note that US startups offer greater synergy and face less public scrutiny compared to Korean counterparts, making them more attractive to investors. However, this trend risks diverting capital away from the local tech scene.
"Startup funding is borderless," said a VC industry official. "Without global competitiveness, startups won’t survive."
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