Next stop for DFJ affiliate network: Korea

Draper Fisher Jurvetson is fund-raising for a $75 million Korea affiliate fund as part of its plan to revitalize and further globalize its network of affiliated funds, PE Week has learned.

The fund will be run by Athena Technology Ventures and its Managing Director Perry Ha. Ha, a fifth degree master instructor of tae kwon do, splits his time between Silicon Valley and South Korea.

News of the Korean fund-raising effort comes less than two weeks after DFJ announced it was starting to raise money, in conjunction with FIR Capital Partners, for a $40 million early stage Brazilian tech fund. The two firms agreed to also raise a follow-on fund called DFJ FIR Brazil Fund II, which expects to raise $100 million from offshore investors.

VCs have invested more than $2.3 billion in nearly 400 companies in South Korea over the last five years, according to data from Thomson Financial (publisher of PE Week). The majority of the money has come from global firms, such as The Carlyle Group, Apax and 3i, and the venture investment arms of large companies, such as Hyundai Venture Investment Corp. or Samsung Venture Investment Corp.

The country is still a fresh environment for U.S.-based VCs. DCM has done one deal there, Storm Ventures has done two and Intel Capital has done six, according to Thomson Financial.

But Korea isn’t the only DFJ affiliate fund out looking to raise money. Sacramento, Calif.-based DFJ Frontier has held a first close on its next fund and New York-based DFJ Gotham is about to reach a first close towards its next fund, PE Week has learned.

Los Angeles-based Zone Ventures, a member of the DFJ affiliate network, launched a $200 million third fund in December 2006. The fund is targeted at double the size of its preceding fund, raised in 1999, according to a filing. The firm was an investor in DivX (Nasdaq: DIVX), which had a successful IPO in September 2006.

DFJ is also poised to announce a major partnership in Europe that will give it a pan-European reach, DFJ Managing Director Don Wood says. The firm is also looking to establish a Russian affiliate. “The economy is doing quite well there, but they need to not be dependent on their natural resources to fuel growth,” Wood says. “They’ve got to start harnessing the brain power that’s there and there’s a lot of it. It’s clearly time to do something in Russia.”

The global push of the affiliate network is led by Wood, who joined the firm in October 2006 from Vanguard Ventures. “His primary role at DFJ will be to bring new value to our network funds and lead our expansion into new geographic and sector markets,” said Managing Director John Fisher.

The firm is looking to bring on another partner to work with Wood and the announcement of that hire will likely come soon, PE Week has learned. The firm has also poached a partner (whose name has not yet been announced) from another venture fund to take responsibility for investing in India.

Wood helped to re-engineer the network to give the partners incentives to stay in it. Affiliates now share their carry with each other instead of just with the main DFJ fund. Wood has also used the network’s size to bargain with service providers to provide benefits at a lower cost, and he increased communications between different affiliates by setting up an email service that allows partners to query the entire network. These “network blasts” are a good way to ensure that something that seems novel in Brazil isn’t already an old technology in Vietnam, for example.