In this episode, we will introduce the Challenge With POSCO brand.

Challenge With POSCO brand was created to revitalize venture ecosystem and foster new growth industries. The department in charge operates a nurturing system that creates a startup infrastructure that enables venture businesses to conduct business and research at the same time and helps startups grow smoothly. Based on these efforts, creating the foundation for POSCO Group’s new growth businesses, creating jobs, and enhancing economic vitality is the future that the Challenge With POSCO brand is going to create.

POSCO is pushing for various projects to realize the vision of the Challenge With POSCO brand. It is also striving to find future growth engines for POSCO Group by investing in venture funds and matching businesses between POSCO Group and POSCO venture companies. Let’s take a closer look at the brand’s core businesses and the newly launched programs in 2021 one by one.

l Venture Business Incubation Center

POSCO supports startup spaces by creating incubation spaces for venture businesses, including the CHANGeUP GROUND SEOUL, a public–private partnership incubation center (Ministry of SMEs and Startups).

▲ CHANGeUP GROUND SEOUL (Yeoksam-dong), a public-private partnership startup space operated by POSCO.

The CHANGeUP GROUND SEOUL made up of seven stories above the ground and one basement floor is different in size from the existing venture startup space launched in Korea. In the meantime, many companies and universities in Korea have operated nurturing and support programs such as venture startup support programs, space provision, and investment but CHANGeUP GROUND is entirely different in scale and research support and investment nurturing programs show a different evolution in scale and systematic aspect.

▲ CHANGeUP GROUND POHANG about to be completed on July 21, 2021.

What makes POSCO’s venture incubation center ‘CHANGeUP GROUND’ special? First of all, venture businesses that have moved in aim to be listed on the global stock market, including the United States. This strategy was established to set a business direction with the goal of targeting the global market from the beginning and decided to have global competitiveness by fiercely challenging businesses and Research & Development. From platform companies to bio ventures, the business situation is getting fiercer. The business model of global companies has changed to an open growth model through venture investment and symbiosis, and it has become difficult to survive with romantic and slow-paced models such as starting a business in a garage. POSCO supports companies to succeed in challenges in these difficult situations and has three systematic support systems for venture companies. Let’s take a closer look at what kind of system POSCO has built.

① Selecting supplier from ESG perspective
The first among them is Research & Development and business space. It enables the utilization of technological infrastructures that are difficult to find in other venture incubation infrastructures. Using the infrastructure of POSTECH, a world-class research-oriented university, including the 3rd and 4th generation of radiation accelerator owned by POSTECH, new materials are developed and big data is processed. It has helped to overcome the reality that existing startup companies like artificial intelligence platforms had the only choice of challenging limited modules.

② Financial links
The reason why existing startups could not dream of challenging the global market was that it was difficult to secure funds. POSCO has established investment-related conditions and raised venture funds with a total of 800 billion won to ensure that venture businesses are not restricted in terms of research size with insufficient energy and funds needed to attract investment. It plans to invest 400 billion won in promising fields and another 400 billion won in new growth domains by utilizing excellent domestic and foreign operators.

③ Business Network support
Including POSCO CHANGeUP GROUND SEOUL which opened in 2020, it is currently forming a CHANGeUP GROUND network regardless of location. It has also formed a business network with startup networks secured through Idea Market Place (IMP) and global companies in Korea and abroad so that there is no problem with global cooperation if only technology and business models are in place. Such infrastructure will be of great help not only to venture businesses but also to open collaboration and global expansion of POSCO Group’s various businesses.

In addition, POSCO has been providing technical support and expanding the business scale by directly participating in various projects promoted by venture companies, as well as a venture business nurturing platform and idea discovery since 2021. The challenge of Challenge With POSCO continues until the day when it succeeds by widening the gap with the startup craze in China and other regions!

l Industry-Academic-Research cooperation eco-friendly energy projects to foster venture business and contribute to carbon neutrality

POSCO, POSCO Chemical, and POSTECH are proceeding with eco-friendly solar energy production projects with Gyeongsangbuk-do Province, an energy platform startup ‘H Energy’, and battery ESS business startup ‘PMGROW’ and it is a project of industry-academic-research cooperation.

This project is a business that installs solar energy modules on the rooftops of private buildings of residents in Gyeongsangbuk-do Province and sells eco-friendly energy produced from the modules.

Once the project is on track, POSCO will be able to reliably purchase solar energy needed to achieve carbon neutrality. POSCO’s Global Quality & Service Management Office supports research on weight lightening of energy modules using Giga steel, high tensile steel, and high corrosion-resistant steel and is also pushing to supply “Posmac.”

Gyeongsangbuk-do Province plans to provide low-priced electricity to vulnerable groups in the region by utilizing a portion of the generated energy revenue. The plan is to contribute to revitalizing the local economy, creating jobs, and welfare for low-income groups and the data generated from power platforms will be processed worthily by POSTECH’s AI analysis and used to build the data ecosystem of Gyeongsangbuk-do Province.

l Development of battery standard model for eco-friendly small and medium-sized electric vehicles

The next business to introduce is cooperation in lightening battery packs for eco-friendly electric buses and automobiles. This business is in partnership with PMGROW, an electric vehicle service platform startup. It is pushing to replace low-priced steel plates or aluminum-based electric vehicle battery cases with high-quality steel materials. In particular, it is planning to propose the shape and steel of optimal battery pack case in line with the battery pack performance enhancement bill that is to be revised from July 2021.

With the technical cooperation between the two companies, PMGROW expects to extend the usage time and lighten the weight by increasing battery capacity and reducing the cost compared to Al. The first goal is to apply in new electric buses that will be released in the first half of 2022. In particular, the completion ceremony of the PMGROW’s mass production plant was held in the next-generation battery regulation-free zone located in Pohang, and it signed an NDA with POSCO for the development of lightweight battery packs under the supervision of the Automotive Materials Marketing Office. It is also planning to develop batteries that will be used for electric vehicles, electric bikes, and small electric vehicles in the long term.

▲ At the signing ceremony of NDA for co-development of lightweight batteries with PMGROW on July 5th.

PMGROW also participated as an angel investor in POSCO Capital and if its corporate value increases by continuously strengthening its competitiveness, it can contribute to POSCO’s profit generation.

We took a look at new programs that POSCO is launching with the goal of Challenge With POSCO. I am so excited that there are a lot of interesting programs and I am looking forward to it. Until the day when the startups fostered and supported by POSCO become decacorn companies beyond unicorn companies, POSCO’s challenge will continue in 2021!

A brand created to revitalize the venture ecosystem and foster new growth industries, Challenge With POSCO! POSCO will continue to carry out activities that create a foundation for new growth businesses, create jobs, and enhance economic vitality.

Venture companies and POSCO. At first glance, the connection between the two seems irrelevant, but POSCO’s investment and support for ventures go a long way. In 1997, POSCO established POSTECH Capital (currently POSCO Capital) to foster venture companies, and, as of present, it is striving to find the future growth engine of the company through the venture platform.

ISSUE The foundation of venture startups and its growth is vulnerable

The advent of the 4th Industrial Revolution has caused a rapid shift in the future industrial paradigm, and existing companies are facing challenges of sustainable growth. As a countermeasure, many global companies are strengthening their competitiveness and looking for new business opportunities by investing and cooperating with venture companies.

So, what is the situation of the venture industry like in Korea? As a joke, it is said that in Korea, the best graduates only start a business when they fail to find a job. The issue is not only the lack of capital and resources but the lack of excellent personnel as well. In Korea, the economic structure is centered on large companies hence it is a challenge for venture companies to advance here. Moreover, due to COVID-19, a lot of business owners are facing a hard time, which has also made it hard for entrepreneurs to start new venture businesses.

According to a survey of the Korea Chamber of Commerce & Industry (KCCI) in 2017, 62% of venture companies in Korea couldn’t survive more than three years, ranking 25th among the 26 OECD member countries. However, if it is possible to create an ecosystem where large companies and venture companies can coexist, the situation will improve. Ventures can be provided with growth opportunities through joint research and testbeds with large companies, and large companies can obtain new growth opportunities and even profits.

The reason why large companies and ventures need to share growth with cooperation could be found here.

And it is also why POSCO is trying to invest in and nurture venture companies with its “Venture Platform,” which incorporates a Venture Valley and a Venture Fund. The POSCO Venture Platform utilizes its unique industry-academia-research infrastructure that includes Pohang University of Science & Technology (POSTECH) and the Research Institute of Industrial Science & Technology (RIST).

SOLUTION 1. Come to “POSCO Venture Valley”

To successfully establish a sound venture ecosystem, “startups” should become more active. POSCO has been helping young venture entrepreneurs lay the foundation to grow their businesses through research, investment attraction, and technology sharing through the “Venture Valley”.

When you hear the word ‘venture’ where is the first place that comes to mind? It would probably be Silicon Valley of the U.S. Silicon Valley is a startup cluster and a jungle of entrepreneurs, housing giant technology companies, such as Google, Apple, and Tesla. The objective of POSCO’s Venture Valley is to build the world’s best venture cluster and produce unicorn companies to become Korea’s Silicon Valley.

Other large companies only participate in the investment of ventures, but POSCO aims to create a Venture Valley as well, with its outstanding venture infrastructure. The distinctive feature of POSCO Venture Valley is that it is backed up with the following factors: 1) space for startups in their early stage, 2) POSTECH, which offers exceptional talent, 3) RIST and R&D infra, that support the advancement of technologies and products, and 4) MOU with MSS and the KVCA.

To this end, POSCO decided to invest 200 billion KRW to create “Incubating Centers” for venture companies in Seoul, Pohang, and Gwangyang, and named it “Change-up Ground”. The incubator facilities would change the future of startups and act as a ground to upgrade their business.

In July, POSCO opened “Change Up Ground,” the first public-private partnership in TIPS (Tech Incubator Program for Startup Korea) Town, Seoul. TIPS Town is a Korean version of Silicon Valley that the Ministry of SMEs and Startups (MSS) has been constructing in Seoul since 2015. MSS is operating the areas Street S1 to S4, while Gangnam-gu Office runs S5. POSCO became the first private company to cooperate with MSS and opened S6.

Pohang Change Up Ground is under construction on a total floor area of 28,000㎡ with seven floors and is expected to be completed in the first half of 2021, housing more than 100 venture companies. Startup tenants can receive support according to the development phase, from startup training to initial investment. Through corporate specialized consulting and mentoring, the ventures will be prepared with a theoretical and practical foundation and participate in various events, such as the Idea Market Place (IMP) and the Venture Valley Biz-Day, where they can attract investment and advance into the market. Also, through coordination with the venture capital, which supports the Venture Valley, the venture companies can apply for the “TIPS” program, a program to support private investment-led technology startups, which might eventually lead to investment from the government. Ventures that have successfully established their foundation in Pohang and Gwangyang can promote and expand their business into the metropolitan area with a secured base on the Streets of Entrepreneurs established by the Ministry of SMEs and Startups in Seoul.

Meanwhile, POSCO launched the “Venture Valley Business Council” in September 2019. The council is to foster youth ventures by communicating with venture companies, incubators, and local governments in Pohang and Gwangyang. To promote technology exchange and benchmarking among ventures, the Venture Valley Business Council will form subcommittees of the three major business areas of POSCO Venture Valley: Materials, Energy, Environment, Bio-pharmaceuticals, and Smart City & Smart Factory. Through this, POSCO plans to provide practical support in creating a venture ecosystem, revitalizing the local economy, and creating jobs for the youth.

With the Venture Valley, POSCO not only utilizes POSTECH’s master’s and doctoral personnel, professors/researchers, but also various startup infrastructure of Pohang in order to build a Korean version of Silicon Valley in Pohang. Therefore, POSCO aims to produce 100 entrepreneurs from POSTECH per year and produce two unicorn companies.

SOLUTION 2. Here Comes the “Venture Fund”

– Investment for POSCO’s future growth also carried out through Venture Fund

Another strategy of POSCO’s Venture Platform is the Venture Fund. While Venture Valley supports in-house and external venture companies to start businesses and grow further with POSCO’s industry-academia-research infrastructure, Venture Fund invests in not only occupying companies of the Venture Valley but also aspiring domestic and overseas ventures to discover new growth engines for POSCO Group. The steel industry is a profound one centered on utilizing heavy equipment, so keeping up with the speed and determination required by the venture sector is challenging. Therefore, the strategy aims to discover new businesses through this kind of open innovation.

Attempts to discover new business ideas and technologies by investing in venture companies aren’t new among large companies in Korea and overseas. On the contrary, it has become an inevitable decision for companies in order to survive the rapidly changing business environment of the 4th Industrial Revolution era. Then, what is the investment strategy of POSCO Venture Fund that sets it aside from other large companies?

POSCO forms and operates various types of funds tailored to the characteristics of each phase of the venture business growth. POSCO’s Venture Fund is differentiated in that it supports the rapid growth of promising venture companies at each stage and executes follow-up investments in outstanding ventures, aligning them to POSCO’s new growth domains.

The investment sector of the fund includes not only new growth domains set by the company but also various promising areas of the 4th Industrial Revolution era. Promising business areas identified in the fund operation process are then included as the company’s new growth domains, which are then sought as new business opportunities to flexibly respond to the rapidly changing business environment. POSCO plans to utilize the Venture Fund investment as a subsidiary means of M&A, and make it a core operating principle to discover the company’s mid- & long-term new growth business and generate investment returns.

Funds for the promising investment field are classified into two, depending on the growth stage of the company: “Seed Fund” is one and the “Growth Fund” is the other. The “Seed Fund” will provide seed funding for newly established ventures that are based on outstanding technologies possessed by university laboratories. For this purpose, in 2019, POSCO created two Seed funds that are operated by POSTECH Holdings and Seoul Techno Holdings, and plans to expand the scope of discovering excellent start-ups of leading domestic universities in their early stages. Recently, POSCO also created the IMP Fund dedicated to supporting selected ventures of the IMP (Idea Market Place) program so that the ventures can receive continuous support for growth after the program.

The “Growth Fund” invests in domestic and overseas venture companies that have entered a rapid growth stage after the venture’s new idea has gone through initial verification in the market. It is operated through collaboration with the best investment operators. As of 2019, there are three domestic Growth Funds operated by SV Investment, Premier Partners, and STIC Ventures, and they are currently being invested in ventures.

Through overseas funds, POSCO plans to read the trends of advanced technology in high-tech and promising fields at an early stage and discover aspiring global ventures based in Silicon Valley. In 2019, “Schroders” was chosen as the investment operator, and the fund was utilized as Fund of Funds to invest in promising overseas ventures. By utilizing the investment operator’s global venture network, POSCO hopes to support overseas investment and entry into the global market, which are essential factors for the quantum jump of domestic venture companies.

Since last year, a total of 95 billion KRW was invested in “Seed” and “Growth” funds investing in these promising fields, and investments will continue in the future as well.

The funds investing in the domain field focus on new growth domains as their main investment field, including the secondary battery material business field, which POSCO is currently pursuing as a new growth engine. In 2019, 50 billion KRW was invested in the “CVC Fund,” and in August 2020, an investment plan of 80 billion KRW was confirmed for the “Strategic Fund,” laying the foundation for investment in the entire growth cycle.

The “CVC Fund,” which is operated by POSCO Capital, is created with POSCO Group funds only and is used to invest in outstanding ventures within the domain. The fund seeks to increase strategic links by partnering with the investment operator from the early stage of the venture. The “Strategic Fund” is a fund investing in venture companies that meet POSCO’s new business strategy and have grown beyond a particular scale. With outstanding external operators, like the “Korea Growth Investment Corporation,” the fund is to be used in expanding the scope of discovering outstanding companies and increasing the scale of investment.

The venture fund is planned to be created based on 800 billion KRW, and the fund strategy will continue to be operated yearly in line with changes in the domestic and global venture investment market and the direction of the group’s new business strategy. In addition, POSCO plans to continue the venture fund in the long-term by utilizing the profits generated from the fund.

Also, POSCO will further enhance cooperation with outstanding domestic investment operators and leading investment institutions, such as KDB Bank, Korea Venture Investment Corporation, and Korea Growth Investment Corporation, that are jointly participating in the existing funds, and strengthen the network with the global venture investment industry.

With these endeavors, POSCO Venture Fund will be able to play a part in the growth of young entrepreneurs, who will become new engines of national competitiveness, while discovering venture companies with potential and nurturing them as new businesses of the company.

※ POSCO Idea Market Place Cases

The Venture Platform is what POSCO has prepared for venture companies that will lead the future with creative ideas and passion! From Venture Funds worth 1 trillion KRW and Venture Valleys to the Idea Market Place for entrepreneurs, POSCO will continue to invest in venture companies to secure new growth engines and revitalize the local economy.

During the event, 16 startups exhibited their prototype products and presented their business plans – these companies had been shortlisted by POSCO last February. Since February, the companies had been perfecting their products and business plans through 1:1 coaching and mentoring sessions.

TENELEVEN, a software development company, came in the top amongst the 16 shortlisted contenders. POSCO Newsroom sat down with the CEO of TENELEVEN and discussed the company’s journey through the process.

▲ Ho-Young Lee, the CEO of TENELEVEN – the Best Startup of the 17th Idea Market Place

l “We Failed Twice, but Giving up Was Not an Option.”

Q: Congratulations for coming in the top at the 17th Idea Market Place. Please tell us a little bit about yourself, and your company, TENELEVEN.
A: Thank you. My name is Ho-Young Lee – at TENELEVEN, we are currently developing “BUILDIT” an artificial intelligence (AI) design service for architecture. I started the company with two colleagues in 2014 when mobile games were booming. We were determined to succeed and created a mobile game using the hydrodynamics theory. We built a physics engine to create the game, but it wasn’t very well received. After the initial failure, we managed to hold on by taking on various consulting projects. It was during this period I came up with a business idea on creating an automated building space distribution with optimal floor space and good amount of sunlight. That’s how the BUILDIT came about.

Q: What prompted you to participate in this year’s IMP?
A: Actually, this is our third try. TENELEVEN didn’t even make the initial cut for the first two tries. This time, when we made it through the initial process, that in itself was quite an achievement. After that, I was delighted to receive positive feedback at the presentation right before the IMP event, and even more when we were declared the final winner. I spent months fine-tuning the program, and going over the business models over and over with my mentor – the mentoring session was immensely helpful in processing how the technology can be applied. Giving up was not an option and I am extremely happy to finally see some results.

Q: What does TENELEVEN specialize in?
A: A good place to start would be ‘BUILDIT CLOUD’ and ‘BUILDIT PRO’. BUILDIT CLOUD is an architectural AI that helps to produce layouts with maximum floor space, number of households, and amount of sunlight. The cloud service allows the users to access it anytime anywhere with an internet connection. The calculated results can be printed in various report forms and data – be it CAD drawings, amount of sunlight per household, estimated construction costs, floor space ratio, etc. BUILDIT allows users to review business feasibility and help them make effective decisions in a timely manner.

Q: What about BUILDIT PRO? What does it do?
A: BUILDIT PRO is a tool that edits the results derived from BUILDIT CLOUD. With BUILDIT PRO, you can modify and switch the locations of a building, floors in three-dimension. Rotating function is also built in. It even takes legal details like building codes into consideration. It also visualizes actual building and terrains, allowing users to see the potential views and the scopes of sunlight and shadow coming from the neighboring buildings.

While developing BUILDIT, I needed expert background knowledge in architecture, geography, computer science as well as urban planning. I think the technical barriers might be quiet high for those getting introduced to the BUILDIT because it utilizes the Big Data, artificial intelligence and AR/VR on top of architectural design. The IT experts at TENELEVEN come from diverse backgrounds, and I think that’s one of our strengths.

l BUILDIT Creates Economic Values of 30 Billion KRW

Q: What projects have you worked on using BUILDIT?
A: We participated in an urban redevelopment project in Seoul’s Bulgwang area. Using BUILDIT, we came up with 700 design plans, finally settling on a plan with optimal floor space and sunlight. The clients’ biggest concern was to come up with the best number of households for the buildings. We were able to offer the best number for them – 100 more households compared to other contenders, and that’s how we got selected. The sale price for each housing unit is roughly 300 million, which means we ended up creating economic values of 30 billion KRW by coming up with that number 100.

Q: What is the industry reaction, especially in the architecture communities?
A: Architectural communities seem to regard it as an effective solution. We are hoping BUILDIT will help alleviate the tedious and repetitive tasks involved in the architecture design process. A HongIk University professor expressed his amazement at how someone with no architectural background, like me, created BUILDIT. He said it was the type of program professional architects were eager to build. I actually come from a computer science background, but at least in architectural communities, I am considered somewhat of an architectural AI expert.

Q: Finally, a word on where the TENELEVEN is headed to next.
A: I’m imagining a future like Katerra, a US-based design and technology construction startup. They are bringing innovations to improve and rid of inefficient processes in architecture. Eventually, I would like to branch out beyond architectural design – we want to grow to become a construction tech company optimizing not just the design but the entire processes involved in design and construction. We think the pre-fab construction is especially compatible with AI technology, so we are planning to build modular buildings using pre-fabs.

Since the foundation of TENELEVEN in 2014, the company has been tirelessly running towards their goal. With the IMP, CEO Ho-Young Lee for whom giving-up was simply not an option even in the face of many failures, produced a valuable result. With Lee’s dedication and persistence, TENELEVEN’s technology is likely to create positive impacts for POSCO and for Korea.