Rewriting the rules of enterprise growth: How LG NOVA is launching AI-native ventures without relying on M&A

Fast Company

12 hours ago

In early 2025, LG NOVA's Sokwoo Rhee laid out a compelling new model about how large enterprises don't need to rely solely on acquisitions or internal R&D to innovate. Instead, they can co-create new businesses by combining corporate infrastructure with startup agility, outside capital, and shared go-to-market momentum.
Now, that framework is moving from theory to reality. Through its innovation unit, LG NOVA, LG Electronics has launched two new ventures that showcase this collaborative model in action: PADO, an AI -powered orchestration platform for data center energy management, and Primefocus Health, a home healthcare solution focused on chronic disease monitoring and post-discharge care. Each reflects LG NOVA's deliberate pivot toward building AI-native businesses in high-impact categories like health tech, clean tech, and energy optimization.
'These companies aren't just ideas,' says Rhee, executive vice president at LG Electronics and head of LG NOVA. 'They're real-world examples of how a large corporation can create new ventures from scratch—faster, smarter, and without doing everything internally.'
Rather than starting with internal ideas, LG NOVA looks outward to support external innovation. Each year, the team interacts with roughly 1,000 startups to identify patterns across sectors and technologies.
'If you look at one or two startups, you only get part of the story,' says Rhee. 'But if you look at a thousand, you can do real statistical analysis on where the market is heading.'
That analysis results in about two dozen internal business concepts annually. A rigorous funneling process narrows that down to one or two spinouts per year, each built in collaboration with ecosystem partners. PADO and Primefocus Health emerged from that pipeline.
Primefocus, launched in 2024, is tackling the increasingly critical space of remote care.
'When patients are discharged from hospitals, they still need to be monitored, especially those with chronic conditions like diabetes or musculoskeletal disorders,' says Rhee. 'Primefocus gives providers a way to continue managing care at home, with better data and better outcomes.'
PADO, which launched earlier this year, focuses on sustainability in one of the world's most power-hungry industries: data centers.
'There's a surprising amount of energy waste even within a single data center,' Rhee explains. 'PADO uses AI to optimize how power is distributed inside the facility, reducing energy consumption and cost. As AI infrastructure expands, this kind of orchestration will be essential to fueling the growth that AI computing will demand.'
WHY LG BUILDS BEFORE BUYING
Unlike traditional corporate accelerators or M&A-focused ventures, LG NOVA doesn't acquire startups or simply invest passively. It aims to build companies. Each new venture is led by an entrepreneur-in-residence—often a founder with prior exits—who helps develop the concept inside LG NOVA and ultimately becomes CEO of the spinout.
'People assume that if you want startup innovation, you need to buy it,' says Rhee. 'But that's not always true. We build these businesses ourselves, and then we strategically license or partner for key components. It's modular by design.'
That was the case with PADO. While the core AI engine was developed internally, the PADO team didn't waste time trying to build non-core components from scratch. 'We licensed technologies from startups to fill where we didn't need to build,' says Rhee. 'It saved time and let us focus on the parts that mattered most.'
One major advantage of LG NOVA's model is its ability to secure early market traction through ecosystem partnerships. In the case of Primefocus Health, the company had a first customer— Marshall Health in West Virginia—lined up before the product launched.
'As a startup, getting that first customer is often the hardest thing,' Rhee says. 'By bringing in partners early, we de-risk the launch. We've even seen state governments express interest in hosting pilot deployments because it means job creation and economic growth.'
LG NOVA also co-invests alongside outside funders through an external venture fund. While that diversifies risk, it also adds critical outside perspective.
'We don't assume we're always right,' says Rhee. 'External investors challenge our thinking. If they say, 'This is where the market is going,' we take that seriously.'
BALANCING SPEED AND SCALE
Building startups inside a Fortune Global 500 company isn't easy. Timelines, expectations, and resource allocations all look different. That's why LG NOVA's process is uniquely designed to work within corporate constraints without sacrificing startup momentum.
'Large companies want results in a few years—not decades,' Rhee says. 'So, we intentionally focus on ventures that could become billion-dollar businesses within five years. That's our benchmark.'
Resource constraints also influence how ideas are prioritized. 'LG is a big company, but that doesn't mean LG NOVA gets unlimited support,' he adds. 'Every decision has to account for time, capital, and organizational patience.'
As a result, the team is constantly iterating its launch process. Primefocus was introduced with a partially developed product that matured post-launch. PADO, by contrast, was more fully formed at the time of its debut. 'There's no such thing as 100% ready,' Rhee says. 'But the more ventures we launch, the more we refine what 'ready enough' really means.'
A NEW PLAYBOOK FOR CORPORATE GROWTH
For enterprise leaders looking to expand into new markets, LG NOVA's model offers a viable alternative to M&A or long-cycle R&D. It's a repeatable, partnership-driven playbook that blends startup innovation with corporate scale.
'M&A isn't always the answer. Traditional R&D is too slow,' Rhee says. 'But co-creating with startups under the right structure can give you both speed and ownership.'
With more ventures already in the pipeline, LG NOVA isn't just exploring new ideas—it's industrializing a method for building what Rhee calls 'AI-native businesses in asset-light markets.' For companies that want to grow beyond their legacy categories, it's a roadmap worth watching.
'Any big company trying to enter new territory has to ask: Are we willing to build differently?' Rhee says. 'Because the old playbook won't get you there.'