4 days ago
Hyundai Launches $91 Million VC Fund For Early-Stage Startups
Cars on display at a Hyundai Motor Company dealership.
GETTY
South Korean automobile giant Hyundai Motor Group, controlled by billionaire Euisun Chung, announced Monday that it has launched the third fund of its corporate venture capital arm ZER01NE, targeting early-stage startups with a fund size of 125 billion won ($91.4 million).
Through ZER01NE, pronounced 'Zero One,' Hyundai said it plans to invest in strategic areas such as AI, robotics, cybersecurity, and energy technologies. Titled Fund III, the fresh capital is drawn from ten of Hyundai's 28 main affiliates, including Kia Corp., Hyundai Motor Securities, logistics provider Hyundai Glovis, and automobile parts manufacturers Hyundai Wia and Hyundai Mobis.
'This fund reinforces the Group's position as a leading strategic investor in transformative technologies,' said Keith Noh, vice president and head of ZER01NE group at Hyundai Motor Group, in a statement about the launch. 'By deepening collaboration with innovative startups, we aim to generate meaningful synergies across our affiliates and accelerate our future-ready business initiatives.'
Across its previous two funds, including Fund II (valued at 80.5 billion won) and Fund I (10 billion won), ZER01NE has invested in more than 105 startups, which it claims have led to 'over 200 collaboration cases' within the larger Hyundai group. One example of such collaboration, according to Noh, is EV battery pack remanufacturer Poen. Backed by ZER01NE's first fund, Poen has served as a partner for the group's battery warranty or general repairs. As of 2024, the startup had processed warranty repairs for a total of 1,500 units across 12 of Hyundai's models.
Representatives from Hyundai Motor Group and ZER01NE.
Courtesy of Hyundai
Founded in 2018, ZER01NE began as a 'creative talent platform' for Hyundai, which the automobile giant described at the time as 'an amalgam' of CVC and 'open innovation.' Apart from its investment funds, ZER01NE operates a startup accelerator that has spanned 195 companies to date. Graduates from the accelerator are eligible for investment based on factors such as their growth potential and long-term partnership opportunities – even if their solutions may not be immediately relevant to Hyundai.
'Innovation is fundamental to a company's survival, and achieving this innovation requires the best talent,' added Noh in emailed comments to Forbes. 'In the past, companies relied on talent they directly hired to drive innovation, but now it is essential to also collaborate with external talent for a company's survival. From this perspective, ZER01NE has been operating as an open innovation platform with the vision of attracting the best talent, and this vision has remained unchanged since its launch.'
ZER01NE's portfolio includes Clobot, an autonomous robot builder that debuted on the Kosdaq last October; and Seoul and San Francisco-based MakinaRocks, which develops machine learning platforms for manufacturing processes. MakinaRocks last raised $10 million in a 2020 Series A funding round that included participation from other major CVCs, including LG Technology Ventures and Applied Ventures, an arm of Nasdaq-listed manufacturing giant Applied Materials.
The introduction of Fund III builds on Hyundai's 15-year history in venture investing. In 2011, Hyundai unveiled its first CVC unit, Hyundai Ventures, in Silicon Valley; six years later, in 2017, the group rebranded this unit as the Hyundai Center for Robotic-Augmented Design in Living Experiences, known as Hyundai CRADLE.
While ZER01NE mainly operates in Korea, CRADLE has five global offices, including bases in Berlin, Beijing and Singapore. Additionally, unlike ZER01NE, which invests directly in startups, CRADLE also functions as a fund of funds. In January, it served as an anchor investor alongside Kia in the $200 million fund launch of Factorial Funds, a Menlo Park, California-based VC firm that was an early backer of AI giants Anthropic and Perplexity.
In recent years, a wave of storied Korean conglomerates has made inroads into venture investing. The government's relaxation of regulations on establishing CVCs in 2021 spurred the creation of new firms, such as Hyosung Group's Hyosung Ventures and GS Holdings' GS Ventures in 2022. In 2023, South Korea's Ministry of Trade, Industry and Energy announced the formation of a CVC Alliance with 42 firms, while pledging to create a fund pool in excess of 8 trillion won ($5.7 billion) by 2025.
Earlier in May, automobile parts giant Hankook & Company Group – one of Asia's largest tiremakers by sales – established its own CVC with a capital commitment of 15 billion won ($10.7 million). Named Hankook & Company Ventures, the CVC will invest in startups from seed to Series B, according to Hankook & Company, spanning AI, robotics and other deeptech sectors.
