Whatever you do, do not refer to LG’s incubator program LG Nova as a corporate venture capital (CVC) outfit.
LG Nova is the sharp point of the spear for LG, the company’s experimental playground for working with startups to explore spaces where the company has seen areas that are ripe for future growth. Backed by a relatively large – and fast-growing – team and a healthy budget, LG Nova is rolling up its sleeves and exploring versions of the future.
Below is my interview with Sokwoo Rhee, LG’s corporate SVP and head of the North America Innovation Center – LG Nova among friends. The interview is edited for clarity and length.
“Are we a CVC? The answer is no. Hell no,” Rhee said. “As you know, CVC is a venture capital game. Their ultimate goal is to have a high return. Therefore, they invest in companies with the potential to increase market value. We are not; we invest, and while we care about corporate growth, we look much more at how the business we can create together will grow. But if there is potential to grow the business with us, and if that company has something that we also need to develop our business, then we will invest and work with them. We want to make a proof of concept (POC), where we put our resources behind the company. And a financial investment is only part of it. We are much more interested in creating joint ventures and joint ventures. For some companies, we may even make direct acquisitions. CVC is very much a financial game; we are more of a business creative play.
“You’re probably tired of hearing about the meta-verse every day,” laughs Rhee, eliciting an honest nod from your correspondent.
“LG Electronics is one of the largest manufacturers of devices and so on. We are doing really well and we will also look to the future, specifically in areas that we believe are ripe for future growth, areas where LG does not necessarily operate today. LG Nova is for areas where LG wants to grow, but we are not yet. Last year, we set up this center to find out what these things are and get new businesses to grow in the new future growth areas. “
The team came up with five different focus areas that explicitly targeted aspects of the market, where LG can leverage its platform and ecosystem strengths while expanding its innovation reach. The areas are digital health, metaverset, EV infrastructure and “smart lifestyle.” The latter is an extension of smart homes, home automation and living smarter through the power of technology. In addition, LG Nova highlights an overall mandate to look at representation across all the categories it serves.
“We’re looking for things like helping underprivileged communities and products and services that can make an impact on communities to improve the quality of life,” Rhee explained. “Business innovation has happened before, but many of them started internally. You take many R&D centers and innovation initiatives, and you spend a lot of time internally in the laboratory to create something new, innovative within existing structures. We look at a very different perspective – we do what we call innovation from the outside in. LG Nova does not have R & D capability and it is done on purpose. We have some engineers, but we do not have to build completely new innovations internally. Instead, we will encourage external devices – startups and so on – to propose the ideas and work with LG Electronics in this new future growth area. We want to find out how we can create new companies together.
“When I say new businesses, it can mean many different things. We are willing to create a new business unit if the idea, the proposals and the partnership hit a home.
So far, it sounds like any other business incubator. Still, the devil is in the details, and LG Nova brings a lot of exciting twists to the company’s accelerator mix. Implementing how it works with its startups is far broader than “write a check and hope for the best” and “here are some customers, good luck”, as many of the other companies take.
The process and the benefits
LG Nova is starting to find its feet and is starting with a funnel process, it calls the Grand Challenge program. It started with a competition launched back in September, which it calls “Mission for the Future”, which was met with great interest from startups; LG’s team tells me that it received over 1,300 suggestions from more than 100 countries.
LG Nova differs from many other incubators in that it does not use the company’s venture capital approach to invest, nor does it look for technology proposals. Instead, the incubator is looking for contributions on how startups want to bring their products to market by leveraging the reach and impact of LG Electronics.
Out of the 1,300 proposals, they make a shortlist of about 50 companies. At this point, each of the companies will be assigned an entrepreneur in residence (EIR), who will work with startups to concretize the ideas and put together a proposal that finds out what the potential synergies are with LG’s larger image strategy and the strengths and opportunities that startups bring.