Back To Top
Finance

[Herald Interview] K-pop rises as retail investment option

Local online platform Funderful plans to offer fans access to investments in Korean productions

Yoon Sung-wook, chief executive officer of Funderful, poses during an interview with The Korea Herald in Seoul. (Park Hyun-koo/The Korea Herald)
Yoon Sung-wook, chief executive officer of Funderful, poses during an interview with The Korea Herald in Seoul. (Park Hyun-koo/The Korea Herald)
Institutional and corporate investments have supported South Korean cultural contents such as the Oscar-winning movie “Parasite” and megahit Netflix series “Squid Game” on their way to global fame. And their success means a large return in profits from content, often considered as risky investment. A local online platform believes that market access to Korean content ready for production could open to a wider public as retail investors around the world are paying keen interest to the fast-growing cultural and entertainment arena.

“We’re looking forward to launching a global financing platform service, which will allow overseas investors to place subscriptions on various Korean pop culture content, including movies, musicals, dramas and exhibitions. With an aim of opening the service in 2023, we have started preparations,” Funderful CEO Yoon Sung-wook said during an interview with The Korea Herald.

“People around the world know that Korea is excellent in content production. In the same way that small domestic investors flock to the US stock market to purchase globally popular stocks, why can’t we attract fresh funds from abroad to produce high-quality Korean-made content?”

Yoon expects to see strong external demand. According to the chief, multiple small investors from Mongolia, Indonesia, Malaysia and the US have approached the company and asked how to participate in the funding rounds for two movies -- the comedy film “Sinkhole” and the upcoming action movie tentatively titled “Decibel,” featuring actors Lee Kwang-soo and Lee Jong-suk, respectively.

Currently, retail investors are allowed to make online investments of up to 5 million won ($4,238) per project following the Capital Markets Act here. Real name verification is a big hurdle since it is on a country-by-country basis, so only Korean residents have been able to join the service so far.

However, the investment service agent’s cooperation with local securities firms that offer mobile trading systems abroad would provide access to investment opportunities, he said. The service may launch in Singapore and Malaysia first, the CEO added.

Founded in May 2019, Funderful received authorization from the Financial Services Commission in February this year ahead of officially launching its service the following month. As of Sunday, 18 projects have completed fundraising through the investment service agent’s platform, with some 15,000 retail investors and institutions injecting more than 4.36 billion won in capital.

Yoon Sung-wook, chief executive officer of Funderful, poses during an interview with The Korea Herald in Seoul. (Park Hyun-koo/The Korea Herald)
Yoon Sung-wook, chief executive officer of Funderful, poses during an interview with The Korea Herald in Seoul. (Park Hyun-koo/The Korea Herald)
Investments get simple and easy on Funderful. With a few taps on a smartphone, investors can participate in online investments through segregated portfolio companies. They can earn profits depending on the success or failure of content invested and a portion of their controlling stake. The firm screens content and analyzes revenue structures first to provide enough information on projects ahead of the fundraising process.

Yoon who built his career at the state-run Industrial Bank of Korea and crowdfunding platform Wadiz, believes that Funderful is the one and only company in the world that invites individuals as investors in cultural content. The firm had to come up with its own business model, and looked to similar service models such as US-based Wefunder and UK-based Crowdcube for inspiration, he said.

“Our vision is to solve information asymmetry on investments for retail investors, while at the same time, provide financing conditions for production companies,” the CEO said. “Since many variables and risks appear in the content market, playing the separate roles clearly for our clients is necessary when promoting Korean content to the world.”

Under the goal, the investment service agent’s successful fundraising projects include the exhibitions “Photographs by Yosigo: Holiday Memories,” “Accidentally Wes Anderson” and the second season of TV Chosun’s melodrama “Love (ft. Marriage and Divorce).” An exhibition of the Naver webtoon series “Yumi’s Cells” and fantasy action film “Spiritwalker” recently kicked off their fundraising rounds, while funding to the third season of “Love” is scheduled to begin in mid-November.

A long-term goal for Yoon is to contribute to the digital transformation of the market by allowing investors to use security tokens and nonfungible tokens to invest in Korean cultural content. Blockchain-based investments would allow producers to raise larger amounts of funds over a longer period. Investors would also generate more stable profits in the longer term, he forecasts.

Funderful aims to raise fresh capital through Series A funding to kick off its development process of building a more skilled global platform. Three institutions from both in and out of the country have shown their willingness to inject funds of their own, in addition to existing investors, according to Yoon. The funding is expected to take place in the first quarter of next year. The company completed its pre-Series A round funding from two limited partners in September last year.

By Jie Ye-eun (yeeun@heraldcorp.com)
MOST POPULAR