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Investing on the future

May 19,2017
The National Pension Service has 555 trillion won ($493.7) in assets, and as one of the four major pension funds along with Japan’s GPIF, Norway’s GPIF-Global and Netherlands’ ABP, it is visited by many global private equity funds and companies.

But strictly speaking, the future of the NPS is doubtful, as the capital is bound to the past. Most of its investments are focused on bonds and PEF. Alternative investment makes up 11.2 percent, and less than 2 percent is on venture companies. Most institutional investors in Korea have similar investment composition. It is quite regrettable, for I promote startup investment and support.

However, global funds are very different from Korean institutional investors. CalPERS, retirement funds for California public employees, invests 500 million dollars on technology ventures and startups, including Tesla, every year, contributing to the innovative industries.

Goldman Sachs, prominent investment firm with 148 years of history, is practically a venture technology investment company now. Among the startups that Goldman Sachs invested in, more than 15 grew to have more than 1 billion dollars in market capitalization, including Uber and Dropbox. CEO and Chairman Lloyd Blankfein is responsible for transforming the company to a leading investor in innovation. He declared that Goldman Sachs was an IT company and replaced one third of the 30,000 employees with IT specialists. Other global private equity funds such as JPMorgan and Morgan Stanley but also Singaporean and Middle Eastern sovereign wealth funds make bold investments on startups.

The world is falling into the vortex of the fourth industrial revolution. Now, the fourth industrial revolution will establish new orders, and new wealth will be created here. But if we invest on today’s economy instead of investing on the gigantic future order, Korea will always be a follower, not the first mover, in the fourth industrial age.

*Co-founder and general partner of SparkLabs.

Lee Han-joo