Do not refer to LG Nova, the company’s incubation program, as a corporate venture capital (CVC) firm. LG Nova is the business’s experimental playground, where it collaborates with entrepreneurs to investigate areas where the company has identified regions suitable for future growth. LG Nova is rolling up its sleeves and investigating future variants, backed by a large — and rapidly growing — crew and a strong budget.
Sokwoo Rhee, LG’s corporate SVP and head of the North America Innovation Center – LG Nova among friends — is the subject of my conversation below. The interview has been edited for length and clarity. “Do we have a CVC?” No, that is not the case. “No way,” Rhee stated emphatically. “As you may know, CVC is a venture capital firm. Their ultimate goal is to generate a large profit. As a result, they invest in firms that have the potential to increase their market value. We are not that; we invest, and while we care about the success of the company, we are far more interested in the success of the business we might build together.
However, if there is a chance to expand the business with us, and if that firm has something, we need to grow our business, we will invest and collaborate with them. We will do a proof of concept (POC) and invest our resources in the startup. In addition, monetary investment is only one component of that. We are far more interested in forming joint ventures and businesses. We may even make outright acquisitions of select companies. We are more of a business creation play than a financial play at CVC.
“LG Electronics is one of the world’s largest appliance manufacturers. We are doing well, but we also want to look ahead, notably at sectors where we believe there is room for future growth, but where LG is not currently active. LG Nova is for locations where LG wishes to expand but is not currently doing so. We formed this center last year to figure out what those things are and to grow new enterprises in the new sectors of future growth.” The team came up with five main areas of concentration, each specifically targeting sectors of the market where LG can use its platform and ecosystem assets to expand its innovation reach. Digital health, the metaverse, electric vehicle infrastructure, and “smart living” are the four categories.
Smart homes, home automation, and living smarter through the power of technology are all part of the latter. LG Nova also emphasizes a broad responsibility to examine representation across all of the categories it serves. “We look for things like supporting underserved communities and products and services that can improve quality of life in communities,” Rhee explained. “Corporate innovation has occurred in the past, but many of them began internally. You go to a lot of R&D facilities and innovation projects, and you spend a lot of time in the lab trying to come up with fresh ideas while working within existing frameworks. We are taking a different approach — we are using what is known as “outside-in” innovation.
LG Nova does not have R&D capabilities, and this is on purpose. We have some engineers on staff, but we will not be developing completely new products in-house. Instead, we want to encourage external entities — such as startups — to contribute ideas and collaborate with LG Electronics in this new area of future growth. We want to figure out how we can collaborate to start new enterprises.
“When I say new businesses, I’m referring to a variety of things. If the idea, recommendations, and cooperation score a home run, we are happy to form a new business unit. So far, it appears to be similar to any other corporate incubator. The devil, though, is in the details, and LG Nova adds a number of interesting wrinkles to the corporate accelerator mix. The strategy it takes with its startups is significantly more comprehensive than the “send a check and hope for the best” and “here are some customers, good luck” approaches used by many other corporations.