Libertylabs, a South Korean startup that acquires small and medium-sized enterprises (SMEs) facing succession challenges and transitions them into employee-owned companies, has secured investment from Primer Sazze Partners and Fast Ventures. This comes just four months after raising funds from BASS Investment and Seoul Techno Holdings.

Founded by CEO Jaemun Jeong, who has experience in family office LP investments, along with a team of New York M&A lawyers, strategy consultants, and software engineers, Libertylabs plans to use the new funding to acquire SMEs struggling with succession issues. Their strategy is to support the long-term growth of these companies by hiring new management, transitioning them into employee-owned firms, and providing software solutions.

Libertylabs focuses on SMEs, which make up 99.9% of Korean businesses, many of which are at risk of closure due to the lack of a successor. Burdensome taxes and the reluctance of successors to take over have made succession difficult, with over 50% of businesses in this situation considering shutting down. These SMEs often find it hard to sell due to their small size, leaving closure as the only viable option.

Libertylabs steps in by acquiring companies across various industries and enabling employees to become both shareholders and workers, ensuring the business can continue. They initially acquire a stake in the company and gradually transfer ownership to employees and new management, promoting a sense of ownership and ensuring long-term sustainability.

Unlike private equity firms, Libertylabs does not resell the companies it acquires. Instead, it operates a model that allows employees to maintain perpetual ownership. The company also develops and implements financial, accounting, and operational management software, typically lacking in SMEs, to boost their efficiency. Additionally, Libertylabs plans to continue developing fintech solutions to support business operations and sell these to acquired companies, generating additional revenue streams.

CEO Jaemun Jeong stated, “Libertylabs aims to prevent the collapse of SMEs, the backbone of the Korean economy, while addressing growing inequality in capitalist societies by granting employees ownership. Our goal is to acquire and transition 10,000 companies across Asia into employee-owned businesses, becoming the largest employee-owned company platform in the region.”