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[FINANCES] Tae Hea Nahm - Venture Capitalist/Storm Ventures

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  • madchinaman
    Q&A: Venture Capitalist Tae Hea Nahm Chris Kraeuterhttp://www.forbes.com/2005/12/22/venture-capital-korea- nahm-cx_ck_1223nahm.html?partner=alerts BURLINGAME,
    Message 1 of 1 , Dec 24, 2005
      Q&A: Venture Capitalist Tae Hea Nahm
      Chris Kraeuterhttp://www.forbes.com/2005/12/22/venture-capital-korea-
      nahm-cx_ck_1223nahm.html?partner=alerts


      BURLINGAME, CALIF. - Tae Hea Nahm ventured from Seoul, South Korea,
      to the U.S. before he was five years old.

      Now, he travels back to the country, and others in Asia, once every
      three months looking for new places to invest, to check in on other
      companies in his portfolio and to get a better understanding of how
      different cultures utilize technology.

      He is a founding partner of Storm Ventures, a Silicon Valley-based
      venture capital firm that specializes in seed- and early-stage
      funding with more than $500 million under management.

      "There's always a lot of great technology. It's just amazing all of
      this new technology I see every day. It's a never-ending stream, but
      the challenge is to find one that people will find real value in,"
      he says.

      One of the firm's recent investments that paid off came thanks to
      Cisco Systems (nasdaq: CSCO - news - people ), which bought San
      Jose, Calif.-based home and office wireless networking equipment
      company Airespace in March for $450 million in stock. Nahm had been
      Airespace's founding investor and its first chief executive. Storm
      Ventures typically invests $10 million or less in companies over
      several financing rounds, with an initial investment of between
      $500,000 and $1 million. One of Nahm's latest investments is in a
      firm called Moonstorm, which specializes in storing coupons on cell
      phones.

      Among Storm Ventures portfolio companies based in South Korea are
      McubeWorks, a firm specializing in multimedia on cell phones, and
      Com2uS, a maker of videogames for cell phones.

      Nahm spoke with Forbes.com about the differences between investing
      in Korea and the U.S. and what's ahead for technology and mergers
      and acquisitions domestically. Here are excerpts from that
      conversation.

      Forbes: What's the VC community like in Korea?

      Nahm: Korean companies historically had a policy whereby the
      chairman of the company could be personally liable for a company's
      debts. That means companies tend to be much more risk averse, so
      Korean companies tend to achieve profitability much faster than
      Silicon Valley companies. The flip side is they tend to invest less
      aggressively, too. There's a higher desire from Korean companies to
      go more for singles and doubles than for home runs.

      How is technology being used differently there?

      Two areas in which they are technologically ahead of the U.S. is
      broadband penetration and broadband wireless. They've had 3G since
      late 2002, and Verizon (nyse: VZ - news - people ) is just deploying
      it now [in the U.S.]. Because they have an advanced infrastructure,
      it is interesting to see what new kinds of services are popular
      there with the understanding that it could happen in the U.S. or
      other countries. On the wireline side, what is popular is massive
      online gaming. Broadband enables you to do that. The U.S. is more
      console-based or PC-based, but I think the same thing will happen
      here because is it is more fun to play games with someone else than
      it is just with a computer. That's what ubiquitous high-speed
      broadband allows you to do.

      On the wireless side, what we've seen from Korea is that mobile
      video has not taken off as fast in Korea as we first thought it
      would. What has taken off is mobile music [over cell phones]. It
      makes sense--people spend a lot of time walking or waiting, and you
      can listen to music, then when someone calls it immediately switches
      over to the cell phone. You can carry an iPod, but it's harder to
      carry multiple devices. If it's all on a cell phone, that becomes
      the most convenient way. I think that a cell phone music player will
      become the dominant form. At the end of the day, you always have
      your cell phone.

      What sorts of interesting technologies are you seeing here in the
      states?

      Mobile apps are one. Also, trying to use an ever-improving
      infrastructure to deliver more services and solutions for
      enterprises and consumers. We invested in 5Square Systems; it's a
      company that automates the front end of auto dealerships. It
      provides the software as a service solution to dealerships so they
      don't have to build their own IT department. It's also a way to
      simplify the whole sales process and make it more user friendly.

      Do you make investments on the hopes that the company will then get
      bought out?

      We don't invest in companies for an M&A exit. I don't think very
      many VCs do that, so it's not just us. Companies will buy if they
      want to, but you can't force them to buy you. If that is the thesis,
      it is a high-risk thesis. We invest on the assumption that the
      company can be a good stand-alone business. Along the way, if we get
      an attractive offer which is good for all constituencies, then M&A
      would be the exit, and we would take it. But that is not the driving
      objective for an investment decision.

      What's the M&A environment like in Korea?

      Korea is different. M&A is a relatively new thing in Korea. In
      Silicon Valley, it obviously has picked up dramatically. Just look
      at the news. You can see there's no shortage of deals.

      Is it more of a buyer's market or a seller's market, or is it in a
      state of equilibrium?

      I would say it is in equilibrium at this particular time. It used to
      be a buyer's market, but with the increased M&A activity--and if it
      continues to increase--it will become a seller' market.
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