[Edaily Marketin Reporter Soyoung Park ] Domestic steel companies are expanding their reach into high-tech industries through corporate venture capital (CVC) investments. This move is intended to address the structural growth limitations the steel industry has faced. The companies are putting into practice a plan to identify new businesses with high growth potential from a medium- to long-term perspective and cultivate them into new growth engines.

According to the domestic investment banking (IB) industry on the 3rd, the CVCs of domestic steel companies are expanding their investment scope beyond the steel, components, and materials sectors to encompass a wide range of high-tech industries, including △rechargeable batteries △artificial intelligence (AI) △robotics △biotechnology △and energy.

An industry official explained the rationale, saying, “While a strategy to introduce AI into steel manufacturing processes to increase productivity and reduce costs is necessary, I believe we must also identify potential new business opportunities one by one.”

The POSCO Group is a prime example. POSCO Technology Investment is executing investments across various sectors through strategies including △holding company CVCs △collaborative CVCs, and △proprietary investment (PI) accounts. In particular, through collaborative CVCs, it is expanding its scope to include the Fourth Industrial Revolution and industries promoted by government policy—areas with high future potential. POSCO Technology Investment has also broadened its focus to include deep-tech sectors where it holds a significant competitive edge, such as △system semiconductors, △future mobility, △big data, △cybersecurity, △aerospace and marine, △next-generation nuclear power, and △quantum technology.

SeAH Technology Investment, the CVC arm of the SeAH Group, identified △robotic automation △eco-friendly technologies △digital transformation (DT) △and future manufacturing as business sectors with growth potential early in its launch. Last year, SeAH Technology Investment formed a 34.3 billion won fund in partnership with Open Water Investment. Busan Metropolitan City participated in the fund as the anchor LP. The fund will make investments primarily in the Busan region, targeting high-tech industries as well as finance and tourism.

Dongkuk Investment, a subsidiary of the Dongkuk Steel Group, is also pursuing the formation of its second fund—with a maximum size of 75 billion won—following its first fund worth 67.5 billion won. The firm plans to invest in potential new business areas centered on AI and AX, including △ robotics △ AI infrastructure △ new materials △ and AI-driven biotechnology.

The investment strategies of steelmakers’ corporate venture capital (CVC) arms are also becoming more similar to those of traditional venture capital (VC) firms. Rather than prioritizing growth potential over profitability when investing in high-tech industries, they now evaluate financial investment appeal based on factors such as growth potential and the likelihood of a return on investment. A key differentiator is the ability to connect investments with group affiliates through proof-of-concept (PoC) projects and open innovation.

They have also opened the door to attracting limited partners (LPs). Generally, when forming funds, CVCs affiliated with general holding companies are subject to a limit of 40% external funding per individual fund. Some CVCs are exploring ways to actively attract funds from policy LPs—such as fund-of-funds—and institutional investors within the regulatory limits.

There is also a growing trend toward exploring co-investment arrangements with other firms. An industry insider in the investment banking sector noted, “As sectors such as AI and physical AI gain popularity, investment rounds are becoming larger,” adding, “This is increasing the need for co-investments with general VCs and financial institutions.”