Yong-Kwan Lee, CEO of Bluepoint Partners, founded Plasmart in 2000 and it has been a NASDAQ listed company since 2012. Plasmart specializes in plasma, a core technology of semiconductor equipment.
Lee, an entrepreneur who started everything in a laboratory, began with a considerable amount of trial and error. Eventually, he founded a deep tech accelerator called Blue Point Partners (referred to here as BPP) to support future generations of tech entrepreneurs.
What are the differences between BPP and other accelerators? We met Yong-Kwan Lee, the CEO of BPP, who aims, with his accelerator, to become the ‘big brother in tech’.
Platum: The core reason for establishing BPP is to support tech entrepreneurs when they need help. BPP mainly invests in deep tech startups. So how do you define ‘deep tech’?
Yong-Kwan Lee: Deep tech is foundational technology in our definition. For example, there are many technologies in a small cell phone. UI and UX technologies are very external and we also call them ‘Skin tech’. On the other hand, cell phones need component technologies, which are the parts and materials that we call ‘Deep tech’.
Platum: It will not be easy to clearly define deep tech and skin tech. I suspect that the ratios matter.
Yong-Kwan Lee: Yes. There is no such thing as a 100% deep tech company, or a 100% skin tech company. In the case of cosmetics companies, BPP would be more interested in companies that are specialising in raw materials or ingredients of cosmetics than companies developing apps that recommend suitable cosmetics to different types of skins.
Platum: Deep tech seems less familiar than skin tech. Is there a deep tech business that is guaranteed to yield a good profit?
Yong-Kwan Lee: Technology itself is very neutral. There are no technologies that you can or cannot make money off of. The fit for the market is important. In case of rockets, it can be a project by a government or a large business that makes a huge profit like SpaceX. How you adapt your business to the market is also important. We call the process ‘Product Market Fitting’.
Platum: That must be the most significant technology.
Yong-Kwan Lee: There is a solid reason for the success of tech startups. Entrepreneurs in deep tech tend to be educated in graduate school. A thesis written by them is usually recognised for its value when there is new discovery. The value is in its novelty.
However, when they enter to the market, the technologies that fit are not necessarily those which are the most novel, or new. iPhones do not contain new technologies, but people love them nonetheless. Entrepreneurs with technology backgrounds tend to find new things in several minds so they end up facing considerable gaps between reality and ideals. Entrepreneurs with business backgrounds are more market-driven so they feel less pressure to create something new.
Platum: What do deep tech startups need to do to know the market?
Yong-Kwan Lee: It is almost impossible for engineers to know the market thoroughly. It is important to have in-house professionals and to strengthen the team. Engineers are sometimes referred as ‘Solution Experts’. They manufacture products according to specifications given to them. However, people who know ‘what’ to make are the experienced people in the industry, and they are usually referred to as ‘Domain Experts’. Early employees of our team are solutions experts. Recruiting domain experts is one of the significant jobs that we have left to do.
Platum: It is not necessarily easy to bring decent domain experts on the team and expect them to cooperate with the other members.
Yong-Kwan Lee: Sure, it can be very difficult. Your point is well made. It is even hard to admit the fact that tech startups need experienced people who know the market very well. However, if the core technology of the product takes 20-30% of the whole process, strategies to commercialise the product make up the rest. Because of their specialty in technology, many engineers think they know the market well. However, a good team knows its limit and can quickly supplement. They also grow rapidly in this case.
Platum: Do you build a team out of individuals at BPP?
Yong-Kwan Lee: Yes. Our positioning is as a deep tech accelerator, so potential entrepreneurs find it a bit difficult to approach us. However, it is not always necessary to have a technology to run a tech business. With bright ideas and specialty in the field, anyone can start a new thing with tech professionals.
Platum: Is there a good example of rearranging a team through BPP?
Yong-Kwan Lee: Yes, Tomocube. One physics professor at KAIST came to us and we looked for business models for a year. It turned out to be optical filters. You can see the structure of the inside of cells, not only the outside, with this filter on a microscope. Additionally, you get numerical values like mass, volume, and surfaces. It is the first innovative technology. And the business model was filters that you can attach to any microscope. Our suggestion to manufacture microscopes was applied, and an experienced professional of optical science commercialisation was recruited as CEO. Ultimately, it became a noticeable bio and medical startup.
Platum: There are some accelerators for entrepreneurs to team up. What are the strengths of BPP?
Yong-Kwan Lee: We aim to find tech startups and help them grow, which is not too different than other accelerators. What is outstanding about us is the high quality human resources, I would say. 16 out of a total of 22 members are experienced investors. Mostly in the chemical engineering, materials, and medical fields. We have four teams and named them from races of a popular PC game called Star-craft. The Tehran team specializes in robot, drone, aviation, semiconductor, and display. The Zerg team is bio and healthcare. The Protoss team is AR, VR, and AI. We recently added another team for service globalisation.
Platum: It is impressive to see subdivisions in deep tech.
Yong-Kwan Lee: One of our members sold drone technology to Hanhwa, one of the largest business conglomerates in South Korea, and it was the first case in Korea. We also have doctors. A large part of our competitive advantage comes from having professionals in different fields.
Platum: Many tech startups have mentioned that they found it difficult to find local investors who have enough understanding of their technology. What are your opinions?
Yong-Kwan Lee: The VC industry has changed also. There were many VCs from business backgrounds but there are also many investors with engineering backgrounds now. However, it is still questionable what values the deep tech industry will give to the emerging market.
VCs estimate the value of a company after seeing its KPI and numerical results. However, deep tech startups normally have a long incubation period–they hardly demonstrate the outcome quickly. It’s important for entrepreneurs to understand the technology business so that they can apply the technology to the market and explain it to their investors in an efficient way. We actively train our portfolio companies to know the market for these reasons.
Even if they know everything about the advantages of a technology, it is a different matter to be able to tie the problems of the market into the value of a technology. If they can weave them together well, they can create a strong story, but it takes time and training.
Platum: What teams do you feel drawn to?
Yong-Kwan Lee: Teams with strong mental strength and will to overcome deep anxiety and initial difficulties, of course. It is important to be able to admit your limit, so it is always good to have a receptive attitude. In real life, being receptive is never easy.
There is one team we like which decided not to use the technology that they have been researching throughout graduate school because they acknowledged the fact that it does not fit into the market. Others, with a more selfish view, force their ideas and technologies to fit into the problems of the market. Most of them fail. Even if their technology means everything to them, a team will succeed if they are willing to give up and move on.
Platum: What are the plans for BPP in 2018?
Yong-Kwan Lee: Our first goal is to invest in 50 companies every year. We made investments in three companies in 2014, seven companies in 2015, 23 companies in 2016, and 25 companies this year. Next year we hope to make 50. The number of investments we make is important, but we want to maintain the quality of philosophy and outcome that we had in the beginning. Thus, we plan to work together with other partners and professionals in different fields in the near future.
(Top photo from 699pic.com)
This article, entitled “Interview: Bluepoint Partners is a Korean accelerator that supports deep tech startups”, was written in Korean by Platum, edited by AllTechAsia.