Thu. Jan 20th, 2022

Whatever you do, don’t refer to LG’s incubator program LG Nova as a corporate venture capital (CVC) outfit.

LG Nova is the point of the spear for LG, the company’s experimental playground for partnering with startups to explore spaces where the company has discovered areas ripe for future growth. Backed by a relatively large – and rapidly growing – team and a healthy budget, LG Nova is rolling up its proverbial 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 has been edited for clarity and length.

“Are we a CVC? The answer is no. No,’ said Rhee. “CVC, as you know, is a venture capital game. Their ultimate goal is a high return. Therefore, they invest in companies with the potential to grow market value. We are not; we’re investing, and while we’re concerned about the growth of the businesses, we’re much more looking at how the business we can create together will grow. But if there’s the potential to grow the business with us, and if that business has something that we also need to grow our business, then we’re going to invest and work with them. We will do a proof of concept (POC), putting our resources behind the company. And a financial investment is only part of that. We are much more interested in creating joint businesses and joint ventures. For some companies we can even do outright acquisitions. CVC is a financial game; we are more of a business creation game.

“You’re probably tired of hearing about the metaverse every day,” Rhee laughs, eliciting an honest nod from your correspondent.

“LG Electronics is one of the largest manufacturers of devices and so on. We’re doing very well, and we also want to look to the future, particularly in areas that we believe are ripe for future growth, areas where LG isn’t necessarily active today. LG Nova is for areas where LG wants to grow, but not us yet. Last year we established this center to find out what those things are and to grow new businesses in the new future growth areas.”

The team came up with five different focus areas, explicitly focusing on aspects of the market where LG can leverage its platform and ecosystem strengths while expanding its innovation reach. The areas are digital health, the metaverse, EV infrastructure and ‘smart lifestyle’. The latter is an extension of smart homes, home automation and smarter living through the power of tech. Additionally, LG Nova emphasizes an overarching mandate to look at representation across all the categories it serves.

“We look for things like helping underserved communities and products and services that can have an impact in communities to improve quality of life,” explains Rhee. “Corporate innovation has happened before, but a lot of it started internally. You take a lot of R&D centers and innovation initiatives and spend a lot of time internally in the lab to create something new, innovate within existing structures. We look from a completely different perspective: we do what we call outside-in innovation. LG Nova has no R&D capability, and it was done on purpose. We have some engineers, but we are not going to build completely new innovations internally. Instead, we want to encourage outside entities – startups and so on – to propose the ideas and collaborate with LG Electronics in this new future growth area. We want to find out how we can create new businesses together.

“When I say new businesses, it can mean many different things. We are willing to set up a new business unit if the idea, suggestions and cooperation are successful.

So far, that sounds like any other business incubator. Still, the devil is in the details, and LG Nova brings a lot of exciting twists to the corporate accelerator mix. Implementing how it works with its startups is much broader than the “write a check and hope for the best” and “here are some customers, good luck” approach many of the other companies are taking.

On stage to announce the launch of LG Nova – Sokwoo Rhee, LG’s corporate SVP and head of LG Nova. (Image: LG Nova)

The process and the benefits

LG Nova has begun to find its niche, starting with a funnel process it calls the Grand Challenge program. It started with a competition launched in September that it calls the ‘Mission for the Future’, which attracted a lot of interest from startups; LG’s team tells me that it has received more than 1,300 proposals from more than 100 countries.

LG Nova differs from many other incubators in that it does not take the venture capital investment approach, nor does it seek technological proposals. Instead, the incubator is looking for submissions on how startups want to market their products by leveraging the reach and impact of LG Electronics.

They make a shortlist of about 50 companies from the 1,300 proposals. At this point, each of the companies will be assigned an Entrepreneur in Residence (EIR) who will work with the startups to work out the ideas and put together a proposal, to find out the potential synergies with LG’s larger strategy. and the strengths and opportunities that the startups offer.

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