395. Small Changes (7)
With the decision made to establish and operate the ‘Venture Capital Fund,’ personnel changes rippled across all battlefields [regional administrative and economic hubs] in Joseon.
Individuals with strong communication skills from various regional battlefields, or those who excelled in the startup screening department, were largely reassigned to the Venture Capital Fund.
Managers from the battlefields, summoned to Hanseong [the capital city, modern-day Seoul] for training on fund operations, sales techniques, and practical adaptation, exchanged knowing glances, their eyes gleaming with ambition.
“So, that’s him…”
“Oh? He’s here too. Just as I expected…”
The court implemented an incentive system to manage the battlefields effectively. High-performing individuals were rewarded with bonuses and favorable performance reviews, boosting their chances of promotion.
Announcements of these bonuses and rewards were prominently displayed on employee bulletin boards in battlefields throughout Joseon.
This motivated ambitious individuals to actively support the sales or startup screening departments.
And now, among the many applicants, the carefully selected individuals stood, each burning with a competitive spirit.
Comprehensive education and training were provided to these chosen personnel.
Managers, upon learning the intricacies of the fund’s operating methods, quipped with a mix of seriousness and jest.
“Looks like our days of frequenting entertainment venues are over.”
“Now we’re gambling in a nationally sanctioned gambling den.”
“I’m experiencing a strange sense of self-reproach, wondering if this is why I memorized the teachings of the sages.”
* * *
Despite their initial reservations, the fund’s employees moved with remarkable speed once the work commenced.
Jeolla Province, Naju,
“Oh my! Magistrate Cha, how have you been?”
“Huh? You were in Hanseong. When did you return?”
Cha Jin-sa, a well-known wealthy man in Naju, was delighted to see the battlefield employee he hadn’t encountered in quite some time.
This was the very person who had managed his banking affairs since he first opened an account at the Naju battlefield.
As Cha Jin-sa extended a warm welcome, Go Young-gu responded with a bright smile.
“I went to Hanseong and just returned yesterday. I bring very good news.”
“Good news?”
“Indeed…”
Having set the stage, Go Young-gu launched into an explanation of ‘Venture Capital’.
* * *
“Hmm…”
When Go Young-gu’s extensive explanation concluded, Cha Jin-sa, sitting with his arms crossed, regarded Go Young-gu with a serious expression.
“Hmm… So…”
Cha Jin-sa began slowly, deliberately.
“So, if I understand correctly, you’re providing funds to businesses that didn’t quite make it through the initial startup screening but still show some promise?”
“That’s correct, sir.”
“And just how much promise are we talking about?”
“An average of 43%.”
“40%?”
Cha Jin-sa’s expression darkened slightly at Go Young-gu’s response.
“In simple terms, only 4 out of 10 investments are likely to succeed, is that right?”
“Magistrate, the success rate for those who pass the initial startup screening is 68%. Besides, what kind of venture capital would it be if it were a sure thing?”
“Even so, it sounds awfully close to gambling, doesn’t it?”
Go Young-gu nodded in agreement with Cha Jin-sa’s assessment.
“That’s right. It’s undeniably an investment that carries a significant degree of risk, much like gambling. But isn’t everything in this world a gamble to some extent? These days, water management is generally effective, so it’s less common, but isn’t farming also a gamble? No matter how diligently you cultivate the land, if the heavens turn against you and send a drought or flood, the entire year’s harvest is lost, isn’t it?”
“That’s certainly true…”
Cha Jin-sa, nodding almost unconsciously at Go Young-gu’s words, then inquired about another aspect.
“So, what kind of interest rate can I expect if I invest in this venture capital?”
“We don’t call it an interest rate, but rather an investment success dividend.”
“Yes, and what is the investment success dividend?”
At Cha Jin-sa’s question, Go Young-gu retrieved a small booklet from his pocket, flipped through it, and opened it to a specific page, continuing his explanation.
“It varies depending on the success of the invested company, but we anticipate a minimum average return of 20%.”
“A minimum of 20%?”
“Yes.”
“So, if I invest 1,000 gold, I can expect to receive at least 200 gold per year?”
“To be precise, it’s 20% of the amount actually invested out of the 1,000 gold.”
“I’m not sure I understand?”
Seeing Cha Jin-sa’s confusion, Go Young-gu elaborated further.
“So… if you invest 1,000 gold, but only 200 gold is used for actual investment, we will calculate the dividend only from the successful investments made with that 200 gold.”
“So, out of the 1,000 gold, only 200 gold is invested, and you’re not calculating the dividend based on the entire 200 gold, but only paying dividends on the successful portions of those investments?”
“That’s right.”
“Why is it so complicated?”
Despite Cha Jin-sa’s complaint, Go Young-gu maintained his composure and soothed Cha Jin-sa with a reassuring smile.
“Oh my! We wouldn’t want to squander the precious money of our investors, would we? We diversify the investments as much as possible and combine them with the investments of others to minimize potential losses.”
“Diversify and combine?”
“Yes. If 10 gold is needed for a particular investment, we divide it into 1 gold units and deduct 1 gold from each of the 10 investors’ funds. This way, even if the startup fails, each investor only loses 1 gold.”
“I see.”
Cha Jin-sa, who had been nodding, frowned again.
“So, even if it succeeds, that’s all the profit I get?”
“Unfortunately, yes. But wouldn’t that significantly reduce the risk?”
“That’s certainly true.”
Cha Jin-sa nodded, seemingly swayed by Go Young-gu’s words. Watching him, Go Young-gu muttered to himself.
‘Either way, the court is the one that stands to lose the least.’
Cha Jin-sa understood Go Young-gu’s explanation to some extent, but some aspects still left him unsatisfied.
“It all sounds good, but… isn’t the dividend rate rather low?”
“There are quite a few costs involved along the way. There’s the second screening fee, the investment agency fee, and the audit agency fee, among others.”
“You’re conducting another screening?”
“How can we risk wasting the precious money of those who have decided to invest? We need to screen the ventures one more time and select those with the highest probability of success.”
“I see.”
Cha Jin-sa nodded at Go Young-gu’s explanation, but his face still betrayed a hint of dissatisfaction.
“Still, the dividend rate seems low…”
“There is a way to potentially increase the rate. It’s a riskier approach, though.”
Cha Jin-sa’s eyes lit up at Go Young-gu’s words.
“What is it?”
“You can make the investment decisions directly.”
“Directly?”
“Yes. You can come directly to the vault next to the Naju battlefield, examine the types of businesses seeking investment, and then choose the ones you believe are most promising and decide how much to invest. You can invest the entire amount the investor is willing to risk, or you can allocate the investment proportionally. However, there is a minimum ratio for direct investment; you must invest at least 20% or more.”
“And how much does the potential return increase?”
“At least 40%. Minimum.”
“Minimum 40%, huh…”
“However, in the case of direct investment, you must also bear the full loss if the startup fails.”
At Go Young-gu’s answer, Cha Jin-sa fell silent and began to weigh the possibilities.
After pondering for a while, Cha Jin-sa sighed and grumbled.
“Hoo~. Aigoo, geez! This is really something!” [Aigoo and geez are Korean interjections expressing frustration or exasperation]
It was a grumble that escaped him, momentarily forgetting his dignity, but it revealed Cha Jin-sa’s true feelings.
After letting out that grumble and smacking his lips, Cha Jin-sa finally made up his mind.
“I’ll trust you and make an investment.”
“Thank you!”
“How much do I have to invest? Surely I don’t have to put in all my assets?”
“No. His Majesty the King decreed, ‘This should benefit both those who want to start a business and succeed and those who want to increase their wealth in the sun. Therefore, those who invest should determine the amount of investment according to their wealth,’ and issued a royal decree.”
“As expected, His Majesty is wise. So, what is the standard?”
“It is determined based on the property tax payment records in the battlefield. However, the maximum amount that can be invested at one time is a minimum of 30% to a maximum of half of the total assets. And once you invest, you cannot invest additionally for one year.”
“If I invest and lose some money, can I withdraw the remaining investment immediately?”
“That is also possible after one year.”
“So, I just have to watch for a year?”
“Yes. Because there are very few cases where the success or failure of a startup is immediately apparent.”
“Hmm…”
Cha Jin-sa, who recalculated the potential profits and losses based on Go Young-gu’s words, eventually succumbed to Go Young-gu’s persuasion.
“I’ll visit tomorrow.”
“Thank you! Ah! When you come tomorrow, be sure to bring your battlefield account book and seal. You’ll need those to finalize the contract.”
“I’ll be sure to bring them.”
That evening, Cha Jin-sa’s wife, Madam Ahn, sought out Cha Jin-sa.
“Go Haeng-won from the battlefield came by during the day. What was that about?”
“Ah! That is…”
Madam Ahn listened intently to Cha Jin-sa’s explanation, pondered for a moment, and then looked back at Cha Jin-sa.
“When you go to the battlefield tomorrow, I’ll accompany you.”
“You too? Why?”
“Don’t I have some property that I received as inheritance? If possible, I should try to increase its value a bit and then divide it among the children, shouldn’t I?”
“Ah…”
Cha Jin-sa nodded in agreement, granting Madam Ahn’s request.
* * *
The next day, when Cha Jin-sa and his wife visited the vault, Go Young-gu greeted the couple with a welcoming smile.
“Welcome!”
“Not only me, but my wife also wants to invest, so we came together.”
“Thank you! It will be a wise decision!”
Go Young-gu led Cha Jin-sa and his wife to a private room within the vault, where another employee brought in several documents.
“I’ll explain everything again.”
“But why is that person with you?”
“Ah! That friend is here to ensure that I explain everything accurately, so there are no misunderstandings or omissions.”
“That’s quite considerate.”
“How can we be anything but careful when receiving such precious investment funds?”
Cha Jin-sa and his wife nodded with satisfied expressions at Go Young-gu’s answer.
“It’s definitely reassuring knowing that the country is involved!”
* * *
After the explanation was repeated, Go Young-gu addressed Cha Jin-sa and his wife.
“I’ll ask again. Are you ready to sign the contract?”
“I am. How much is possible?”
“And what about you, Madam?”
“I’m ready to sign the contract as well.”
“Then…”
From that point on, everything proceeded smoothly. The maximum possible investment amount was determined based on the records they had brought. Once Cha Jin-sa and his wife decided on their respective investment amounts, a representative from the battlefield transferred the funds from their accounts to accounts created within the vault.
And, while stamping the document confirming that all processes were completed without issue, Cha Jin-sa and his wife let out tired sighs.
“Hoo~. Is it finally over?”
“Now the real work begins. How would you like to invest? Would you prefer to invest directly? Or would you like us to manage it for you?”
Cha Jin-sa pondered for a moment at Go Young-gu’s words and then asked.
“Is a half-and-half approach possible?”
“It is possible.”
“Then, I’ll do that.”
“Understood. And what would you like to do, Madam?”
“I would also like to do half and half.”
“Understood. Then, this way.”
Go Young-gu guided Cha Jin-sa and his wife to the largest room in the vault.
“This is the situation room. As you can see, the bulletin board on that wall displays the names of the companies in Naju that are seeking investment, and the section next to it shows the current investment status of each company.”
“They’re all about half full?”
“That’s due to the government’s support fund.”
“Ah…”
“First, please have a seat.”
Go Young-gu offered seats to the couple, sat opposite them, and continued his explanation.
“The papers placed on this table are the 5-day report, the 10-day report, and the monthly report, in that order. The 5-day report contains records of matters related to those seeking investment within 50 li [approximately 20 kilometers] around Naju, updated every 5 days. The 10-day report provides updates every 10 days on investments being made throughout Jeolla Province, and the monthly report covers all of Joseon.”
“Is that so?”
Cha Jin-sa and his wife examined the papers while listening to Go Young-gu’s explanation. The papers contained detailed records of individuals starting businesses in various fields, along with assessments of their chances of success.
That day, Cha Jin-sa and his wife decided to invest, carefully selecting a mix of companies starting businesses in Naju and companies starting businesses throughout Jeolla Province. Of course, the investment amount represented only a portion of their total investment funds.
“Thank you! We will do our best!”
“Please take good care of us.”