INTERVIEW Goodwater Capital co-founder Eric Kim shares insights and values in investment, life

Goodwater Capital co-founder and Managing Partner Eric Kim / Courtesy of Goodwater Capital

By Anna J. Park

• Published Oct 8, 2023 1:20 PM KST
• Updated Oct 9, 2023 5:50 PM KST

Eric Kim is the co-founder and managing partner of Goodwater Capital, a multi-billion-dollar global venture capital firm based in Silicon Valley. Co-founded by Kim with Chi-Hua Chien in 2014, the venture capital firm has invested exclusively in consumer tech businesses with a clear mission-driven goal of empowering visionary entrepreneurs who can bring positive changes to the world. The firm is now the world's largest consumer-tech investment firm.

Kim’s track record speaks for itself, having successfully led early stage investments into generational companies such as Kakao, Coupang, Toss, Daangn Market (Karrot), Musical.ly (now integrated into TikTok), Xendit and Momo, among others.

Global in their approach, Kim and his partners currently invest in over 20 countries across the Americas, Europe and Asia. Goodwater Capital has also recently closed on $1 billion in capital commitments for its two new funds. About 60 percent of the newly raised capital will be invested in early- and seed-stage startups.

Kim went to Yale University for undergrad, earning his bachelor’s degree in cognitive science, magna cum laude. He also played the cello as a member of the Grammy-nominated Yale Cellos during his undergrad years. He went on to receive his MBA from Stanford’s Graduate School of Business. He worked as a business analyst at McKinsey & Company for two years and as a managing director at Maverick Capital for seven years before he founded Goodwater Capital in 2014.

The Korea Times had an email interview with Kim, who's residing in the U.S., to learn from his deep insights and values that have led his successful investment decisions and his impactful life.

Q. Could you tell us how your unique background in music and science influenced your decision to pursue a career in the finance sector and to start your own venture capital firm?

Music has given me so much, including my start in investing. When I was 19, an investment firm in New York was recruiting quantitative researchers for the summer that had a background in classical music and coding ― I must have been one of the few candidates that met the criteria. That experience helped me appreciate the power of utilizing data to separate signal from noise. It also helped me realize that investing is ultimately the pursuit of truth, and getting to that truth is a combination of art and science.

There are so many parallels between music and venture capital. Startups, like musicians, need to have strong fundamentals and foundations. Exceptional startups, and exceptional musicians, elevate those fundamentals to the point where they are actually breaking the mold through creativity and innovation.

As investors, we are looking for those outliers that are creating something exceptional and unique. However, there are no shortcuts to get there ― mastery of basic fundamentals (strong teams, competitive differentiation, operational efficiency) is required as part of the journey.

Q. What were key moments in your life that motivated you to establish Goodwater Capital? Please share how it all began, and what is the meaning of the name “Goodwater Capital.”

Water, like technology and capital, is a very important resource that needs to be stewarded well. It’s the source of life for every living organism, but the lack of water or too much water can lead to catastrophic outcomes. Similarly, technology and capital can be the source of innovation and progress for our society, but at times, can be used in nefarious ways as well.

We founded our firm to be the “Goodwater” in the venture capital ecosystem ― to be a source of positive impact through our careful stewardship of technology and capital. When we started Goodwater, we really didn’t think that the world needed another typical venture capital firm. In fact, there are so many incredible firms that were already in existence. However, born out of our own personal experiences and hardships, we saw the clear need for an investment firm to be mission-driven and have strong values.

We are by no means perfect, but we dreamed that Goodwater could have the opportunity to change the world by infusing our values into the most influential companies in the world. That there could be a ripple effect that would ultimately be felt by the end consumer.

If you look around, our lives are filled with technology and it plays such a key role in our culture. What if the investors behind those technologies were to simultaneously not only seek out great returns, but also positive change and impact? What if we could seek to serve one another through our investing? That mission orientation is what drives our 65-person team to go above and beyond on behalf of our portfolio companies.

Q. How do you evaluate the potential of early-stage startups and what are your criteria that you consider most important? What are the key attributes that you look for in a startup when making an investment decision?

When we first look at an early stage investment, we put ourselves in the shoes of the founder and dream really big. We ask ourselves, “What if this is successful?” while taming the inner critical and analytical voices in our head. This allows us to really understand the full vision of the entrepreneur and see the huge potential ahead.

After that process of “dreaming the dream” we then go about a very diligent investment process to see if that big idea and thesis can sustain long term. Frankly, most startups will fail and our job as venture capitalists is to find those exceptional companies that will realize their full potential while many others will fail.

However, if we are too critical from the beginning to the point where we can’t see the potential, we have no shot at investing in the next great big idea. At the same time, we have to be very precise in our diligence process so as to find the rare gems that will actually succeed.

One of the most important things we are looking for is the founder’s “skill and will” to figure out hard problems. No startup experiences overnight success. It is through many ups and downs that a startup will find its long-term success. Thus, the most important criteria we are looking for are unique founders that will overcome obstacle after obstacle to navigate the growth of their startups.

Q. Goodwater Capital has been exclusively focusing on investing in various global tech companies. What draws you to this sector, and why does your firm stress consumer tech so much?

Goodwater focuses 100 percent on consumer technology investing. What that also means is we don’t invest in Software as a Service (SAAS), business-to-business (B2B), security, biotech or cleantech. We are obsessed with the power of digital platforms that have strong network effects to them as they help humans flourish in their daily lives. These include social networks, e-commerce companies, fintechs, healthtechs, foodtechs, proptechs, entertainment companies and more.

The very best consumer technology companies become core utilities that consumers can’t imagine their lives without. They provide tremendous value to the end consumer and it’s no surprise that the largest companies in the world such as Google, Meta, Tencent, Amazon and Apple are all consumer technology companies.

Because they are platforms that get better as they have more consumers on their platforms, they are very compelling and defensible companies over time. We see this also in companies like Netflix, Paypal, Uber, Spotify and Instacart that have gotten to significant scale through a platform approach.

Within consumer technology, the global opportunity is massive. Our seed portfolio is called Genesis and it has over 700 companies in nearly 50 countries around the world and our core portfolio of roughly 80 companies spans North America, Latin America, Europe and Asia.

We are seeing the democratization of knowledge and services being accelerated in local economies around the world. Consumer technology startups are the direct beneficiaries of this transformation.

Q. What sets Goodwater Capital apart from other venture capital firms in terms of supporting portfolio companies?

Roughly two-thirds of the team are data scientists, product managers and engineers that come from some of the leading consumer technology companies in the world. In fact, my partner and head of platform, Vivek Subramanian, was the former head of product at Coupang for several years.

This dedicated team builds technologies and services not only for Goodwater but also for our portfolio companies so that they can accelerate their growth. This unique approach to venture capital is complementary to strong board services and providing great advice to our founders. Our internal platform team provides us a huge edge to provide differentiated services to our portfolio companies.

Q. In addition to your huge successes with Coupang and Kakao, you’re investing in many innovative Korean startups, including Toss, Karrot and Class 101. Compared to startups from other countries, are there any unique features about Korean startups?

Korean startups often offer a crystal ball for innovation to the rest of the world. Because of Korea’s IT infrastructure (mobile internet speeds two times faster than the U.S.), dense urban centers and strong educational system, key technology trends are often manifested in South Korea first.

Korean entrepreneurs created some of the first social networks (Cyworld), messaging apps (Kakao), and gaming companies (NCSOFT). Companies such as Coupang in e-commerce and Toss in financial services are providing consumer experiences such as next-day delivery and personalized financial dashboards that are ahead of their global peers.

A common ingredient we observe is extraordinary resilience of founders in the Korean ecosystem. This single characteristic is often the most important deciding factor in a startups future success.

Q. Not all investments can succeed. Some of the companies that were invested by your firm must have failed. How do you cope with such failed investments? Not only failures in investments, but many people face failures in their lives as well. Could you share some of your insights on how to face and overcome failures in life, and how to embrace uncertainty in life?

In the venture business we're wrong more than we're right. As a result, we have to deal with failure quite a bit. It's easy to get down on yourself and be your worst critic. But as I've matured, in those instances of failure, I'm learning to really accept myself for who I am and realize that one investment does not define me.

In fact, whether an investment goes well or not does not change who one fundamentally is. It's important to not get too high or too low. When an investment goes well or not, the next day, we get up and we need to go about our process and preparation with full energy.

We always have to stay hungry and humble ― when we fail, that's even more fuel to go out and be our best self. When we "succeed," we can't let it get to our heads ― we need to go back and continually improve. But yes, we can be our worst critic and it's important to keep the self-talk positive and remember that we are all more than worthy from day one.

Q. What advice would you give to aspiring entrepreneurs seeking investments and would-be venture capitalists?

Seek three levels of learning. First is to have a strong set of mentors you can learn from. Second is a close set of peers you can share with. Finally, third, is a set of mentees you can teach. The combination of those levels will provide you an accelerated path to learning that is helpful in whatever field you go into.

Q. What do you think is your purpose in life? How do you define success?

Stanford business school asks a very simple question for every applicant: “What is most important to you and why?” For me, the answer was simply that my faith is most important to me because it calls me to a life of service. For sure I am by no means perfect ― far from it. But what has been a constant pull in my life is to try to serve others. To serve a greater good than yourself.

To paraphrase Arthur Brooks, society will teach us to use people, love things, and worship yourself. In a life of service, we are actually called to use things, love people and worship the divine. If I can try to stay that path, that will be success.