“D2SF is Naver’s open window for startups. As it is open wide at an accessible level, it provides a similar atmosphere as a neighborhood café or tea shop, or even a guest reception room. Startups that wish to collaborate with Naver with the technology they possess or hope to grow are invited to feel free to knock on the door.”
Naver’s D2SF (D2 Startup Factory, hereafter referred to as D2SF) was established in 2015 and is ‘strategic startup investment organization’ that helps the growth of early technology startups through investments and promotes synergy with Naver. It has been in operation for 7 years around Gangnam station with its accomplishments being widely recognized internally and externally, which lead to its expansion to the new Naver office located in Jeongja-dong, Bundang-gu in the same form of model.
As such, ‘Naver D2SF @Bundang’ seeks to become a ‘Collaboratory (Collaboration + Laboratory)’, where startups and Naver can test and collaborate together in one place to grow together. It is looking for points of collaboration with startups, with a dedicated workspace with 140 seats, as well as restaurants, cafés, and meeting rooms. It also uses the new Naver office, ‘1784’, as a testbed to showcase and get feedback for new technology or services and build references.
We were able to visit Naver D2SF @Bundang, which has a synergistic and collaborative relationship with startups located in Pangyo Techno Valley, and discuss various topics related to Naver and Startups with Sang-hwan Yang, the Leader of the center.
Q1. With Naver D2SF now entering its 8th year, please introduce some of its achievements and success cases of startups that received investment.
A. Leader Sang-hwan Yang: D2SF was established in 2015 and invested in around 100 startups in various fields, such as ▲AI, ▲3D, ▲data analysis, ▲mobility, ▲robotics, ▲content, ▲and commerce. We mostly focused on investing in early technology in the seed and series A phase and focused not only on the growth of startups when investing, but also on how to lead its collaboration with Naver. We have connected 1,335 startups with Naver and produced around 163 technical collaborations, and around 67% of startups we invested in have either collaborated with Naver or are in talks for collaboration.
D2SF picks in-house communication as the most important element in creating synergy with startups. We communicate closely with Naver’s relevant technology organizations from the investment review stage and communicate frequently with Naver’s technology and business leaders and share the achievements of the startups. This step provides various opportunities in discovering new demands for collaboration. A leading case of such a startup is ‘Crowdworks’, a startup we invested in in 2017.
Crowdworks (CEO Min-woo Park) is a data labeling company that provides a ‘data pre-processing work solution’ that converts the large amount of data needed for making AI into clean and high-quality data. Since the early days of its foundation, it has worked with Naver in the development of its solution. They worked together with Naver engineers and designers to promote the growth of the solution and worked on around 350 projects over a period exceeding 5 years. Crowdworks currently continues to collaborate with around 50 teams from Naver. Key examples including Naver’s translation services like Papago, as well as Clova, and Zepeto, all use technology from Crowdworks.
Q2. Not even 2% of Korean startups have actually received investments from VC. As such, the reality is that most startups rely on support from institutions. What are the differences in Naver’s investment policy, compared to regular VC and institutions?
A. Leader Sang-hwan Yang: D2SF’s identity is defined by ‘Corporate Venture Capital (CVC)’. D2SF was created to be a pathway to externally receive innovation needed for growth in Naver. As such, it can be said that the purpose of the strategic perspective is stronger than the purpose of the financial perspective of the VC. More than the economic value or revenue of the company, Naver considers growth with Naver, pioneering new markets, and global expansion when investing.
CVCs are usually operated as subsidiaries and are financially independent, making them a form of investment for economic gain. On the other hand, Naver’s D2SF is a group in the company instead of a subsidiary and splits their standards and invests in two tracks, which are ▲’Inlier’, which is highly relevant to the current business and can be expected to create synergy in a relatively short period of time ▲and ‘Outlier’, which is not as connected but has high technical value.
This is the reason D2SF opened a new base in Bundang following Gangnam and steadily invests in startups. This is because, in addition to immediate collaboration, strategic investments require preparations in new technology and in the market as the long-term start. We continue to be on the lookout for investments in new areas of business that Naver is currently not a part of.
Q3. Recently, industry experts have been critical, saying that the ‘liquidity party in Korean startups is now over’. They are now predicting that BM for profit is desperately needed rather than growth. What is D2SF’s opinion on this, and what measures do you have to maximize the profitability of startups?
A. Leader Sang-hwan Yang: 80% of the startups D2SF has invested in are B2B companies. When the liquidity party dies down and the economy takes a hit, the consumer psychology of individuals become conservative, putting B2C markets at risk. However, B2B startups that conduct business with companies keep a consistent demand.
The reason for this is because most companies discover weak points and have an increased need for equipment for automation and productivity. If you focus on spotting this opportunity in the market and building business pipelines, this can be a time of opportunity for tech-related startups.
D2SF supports startups so that they can spot these opportunities in the market and forms a partnership through exchanges and collaboration with Naver. They also actively give support in promotion and marketing to help startups form a presence on the market and enables them to actively share the direction of the market and experience and know-how through the startup community in D2SF.
Q4. CES 2023 is now right around the corner. Please introduce some companies D2SF has invested in that won the CES 2023 innovation award.
A. Leader Sang-hwan Yang: From the startups that D2SF invested in, 8 of them won the CES 2023 Innovation Award. 2 of them, which are ▲EVAR Inc. (CEO Hoon Lee) ▲ and NdotLight Co., Ltd. (CEO Jin-young Park), have entered Pangyo Techno Valley.
EVAR, a EV charging solution company, won 3 crowns in 2 categories of the CES 2023 Innovation Awards for ▲’Parky’, a self-driving charging robot, ▲ and ‘VMC (Van Mounted Charger)’, an EV charger mounted on a vehicle.
‘Parky’ is a method of charging EVs that overcomes locational limitations by a charging robot equipped with a battery autonomously drive to the user to charge their EV. ‘VMC’, which won the Innovation Award in the smart city category, is a mobile EV charging solution equipped on vehicles, where a van with a mounted battery is dispatched in an emergency to provide fast charging services when a user makes a call. As VMC not only charges EVs but provides care for the driver’s safety, it is drawing attention from various industries, such as the insurance industry and the remote medical industry.
NdotLight is a startup that possesses 3D engine technology, and had its global technical competitiveness recognized with its selection alongside Unity and Unreal as ‘Major 3D Engines that Lead the Global Metaverse Market in 2022’ by CB Insight.
‘NdotCAD’ developed by NdotLight is a solution for designing 3D models on web browsers. As it supports the entire process from 3D design and file sharing to 3D asset provision on a cloud-base, it created an environment where anyone can communicate and collaborate in real-time on 3D designs regardless of PC environment.
Q5. It is projected that the global economic downturn will continue next year. What are D2SF’s mid and short-term plans in such a situation?
A. Leader Sang-hwan Yang: Despite the global contraction in economy, startups continue to show healthy growth. The value of companies and subsequent attraction of investment has increased, and survival rates reach 98%. We can see the advantage startups have in flexibly adapting to market conditions. As such, we expect the synergy between startups and Naver to increase compared to 2022.
This is also an opportunity for strategic investors to meet startups that can truly compete. D2SF has continued new investments in the second half of this year to seize opportunities, and regularly updated public offering for new investment on the homepage to more actively look for early startups. We plan to continue actively investing next year as well.
Q6. Finally, what kind of entity does D2SF want to be for Korean startups? Also, please give us a word of advice that you would like to share with prospective startup entrepreneurs that wish to be a part of ‘Naver D2SF @Bundang’.
A. Leader Sang-hwan Yang: Both in Korea and abroad, tech-based entrepreneurs are lonely by structure. This is because there aren’t even 1/10 the number of tech startups compared to startups in non-tech fields. There are few opportunities for startups to give and receive help for growth, help to solve problems, and share information.
Naver D2SF focused on forming a startup community by creating an organization. We have currently gathered around 100 startups to build a strong community.
D2SF is a window open wide at an accessible level for startups. We will actively seek places to invest through Naver D2SF and serve as a technology entrepreneur, growth partner, and a center for synergy. We invite startups that wish to grow together to feel free to knock on our door.
Source: Pangyo Techno Valley Official Newsroom