Fleur Pellerin and Korelya Capital believe that there is a huge potential for Asian companies to invest and do business in Europe

For most startups in South and Southeast Asia, Europe has not been on top of their mind when it comes to expanding their business. They primarily looked at other economies in Asia or the US to expand their operations. There are many reasons for this reluctance, including language barrier and cultural differences.

But it needs to change, says Korelya Capital. Based in Paris and launched by Fleur Pellerin, a former Minister of SMEs, Innovation, and Digital Economy in France, the VC firm believes there is a huge potential for Asian companies to invest and do business in Europe. The fund also believes that Europe has to look beyond the US startup market and establish good ties with the Asian startup ecosystem.

“In the beginning, our idea was to invest in European startups as the ecosystem was growing and maturing,” said Paul Christophle, Principal of Korelya Capital. “Ten years ago, we (Europe) were far from what we are right now. While the link between Europe and the US was very strong then, it was not the case when it comes toour ties with Asia. We at Korelya wants to change this.”

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The VC firm was launched two and half years ago to invest only in European startups. But it has now shifted its focus to Asia. “Pellerin thought that there is a correlation between European and Asian players on the tech side,” he said, in an interaction on the sidelines of a press tour in Paris. “From the European point of view, Asia is no more an anonymous market. For consumers and businesses, Asia is a very innovative market with strong growth rates. So it is naturally and easily a huge opportunity for Europe companies to develop there.”

However, from an Asian point of view, Europe is still a bit in the dark, he said. For instance, Europe is not really in the scope of South Korean and Taiwanese players when it comes to investment. Korelya says it needs to change and it has to help Asian companies to discover European opportunities.

“Taiwanese and South Korean players sell smartphones and consumer tech in Europe, but they are not making any startup investments here. I think their investment activities in Europe have potential financial opportunities for assets,” added Christophle.

“Europe is not as mature as the US, China or Asian countries, but it is growing fast — both in terms of startup creation and investment raise. Every KPI indicates this. However, Europe has only one third of what is required in terms of funding, compared to the US. Europe has changed and now we have to communicate to the rest of the globe that we have changed and it is an opportunity for investors,” said Christophle.

According to Christophle, there is another layer that global internet is intimidated by US players. Europe has to find partners in Asia to build a counter power to the US. “This is when Pellerin decided to start Korelya,” explained Christophle.

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Korelya Capital is a EUR200 million (US$224 million) fund backed by Asian LPs. As of now, all the LPs come from South Korea and Japan. It is now in the process of raising its second fund and Christophle hopes to onboard investors from Hong Kong and Singapore. “The idea is to fund-raise in Asia and invest in Europe only, and then help our portfolio companies in Europe to develop back in Asia and to work with parters and LPs out there.”

To date, Korelya has invested in 15 European startups in the mobility, content, blockchain, and education sectors. It is now testing different verticals and also testing to see how it can export these startups into Asia and find out a point to link, primarily with Singapore. “It is much easier to learn SaaS from Singapore, where the market is small and medium businesses are thriving, rather than in South Korea where you have consumer giants Samsung LG, who don’t really buy software from outside.”

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