Samsung Securities leverages on superrich¡¯s pre-IPO demand in startups

Superrich Koreans will find it easier to make pre-IPO investment in up-and-rising unlisted startups as Samsung Securities Co. is set to introduce a cooperative trust for private investors.

Maeil Business Newspaper has learned Samsung Securities has already pooled 11.4 billion won ($9.69 million) from 40 or more individual investors with cashable assets of more than 3 billion won.

The trust works like a blind fund investing more than 50 percent in several startups less than three years old. The brokerage house is review promising tech startups, according to sources.

Accelerator Bluepoint Partners will be in charge of operating the fund while Samsung Securities manages clients. Bluepoint Partners has invested in 186 early-stage startups, of which 92 percent has survived and raised a combined 413.8 billion won in follow-up investments.

Samsung Securities is planning to follow up with more trusts upon finding strong interest in startups from wealthy individuals.

Venture capital investments have been on a steady rise in Korea. According to the Korean Venture Capital Association, venture capital investments in Korea from January to June this year jumped 85 percent from the same period last year to 3.07 trillion won. The investments totaled 4.3 trillion won in 2020 from 2.38 trillion won in 2017.

It is also the first time for a Korean securities firm to arrange venture capital trust for individual investors.

Local brokerages have been reluctant to establish individual investment cooperatives, a type of private equity fund, due to the difficulty of attracting investors and complex administrative procedures. The hardship to find a qualified accelerator who can earn trust from clients is another holdup as many accelerators are not good at maintaining high quality customer care.

Rich investors have been showing a high interest in investing in promising early-stage startups for high returns as well as a benefit of saving taxes. As investors in an individual investment cooperative are required to invest at least 50 percent of their initial investment in startups less than three years old, they can deduct up to 50 percent of their income by investment section.

The brokerage will continue to launch similar products for its 4,000 or more wealthy customers.

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