The Korean company has been working on the technology for the past four years and plans to launch early in 2026.
Korean conglomerate SK Group plans to spin off an internally built recycling technology into an independent venture, in a sign of how corporates are increasingly turning to venture building as part of their innovation strategy.
SK Group, one of South Korea’s largest conglomerates, which has a variety of businesses including chemicals, petrochemicals, semiconductors and telecommunications services, plans to build a demonstration plant in the US for its technology for hard-to-recycle items.
The new technology, which the company has been working on for the past four years, is part of SK Group’s goal to be in a leader in the circular economy.
Corporates typically invest in startup technologies through their corporate venture arms rather than build ventures internally, but venture building is becoming more common as the dearth of exits in the startup sector pushes companies to broaden how they innovate.
The company’s decision to build a technology in-house was partly driven by the fact that few recycling startups have the ability to scale into commercial ventures, says California-based Hee Jung (pictured), head of innovation and investment at SK discovery, SK Group’s corporate venturing arm.
“The reason that we wanted to build this is that there is a missing component in the solutions that startups offer. They don’t have the commercial scale in mind,” says Jung. “A lot of startups are so focused and locked into their technology at the lab scale. We wanted to build with that commercial scale in mind and think about mass production from the start.”
The as-yet unnamed venture takes plastic-based products that usually end up in landfill – such as fishing nets, banners, carpets, spandex clothing – and turns them into a monomer – a basic unit of polymer used in synthetic plastics manufacturing. The technology uses a catalyst as part of the recycling process rather than the traditional method of pyrolysis, which is energy intensive and polluting.
“We wanted to build with a commercial scale in mind and think about mass production from the start.”
Hee Jung, head of innovation and investment at SK discovery
SK Group already has another technology it built in-house for hard-to-recycle products and for which it has a commercial plant. The new spinoff company won’t compete directly with this business, however, because it produces a different kind of monomer and will target different customers, such as paper and pulp companies and fashion brands, says Jung.
SK Discovery decided to spin the new plastics recycling company off in part because the team believes that would allow the startup to begin commercial operations faster. “We don’t have to go through the ladder of different approval processes and convincing different team members and going all the way to the top. That takes a long time,” says Jung.
Spinning out the company also means SK Group doesn’t have to bankroll all development on its own, and the venture can raise additional funds from other backers. Jung says that although SK Group may retain equity in the spinoff, it will look primarily for outside investment, so that it retains independence from the Korean parent.
“If the spinoff has too much dependence on the mother company, it might be good news for the startup and new investors, knowing that this startup is backed by this gigantic company. But, it is also a limitation for bigger multiples, where we can have much better success,” says Jung.
Jung plans to seek investment from financial VCs with experience in recycling technologies and that have a network of potential end users. The technology is designed to slot into existing infrastructure in manufacturing facilities, meaning businesses don’t have to build new factories to accommodate the technology.
The company plans to finish testing the technology and forming a team before officially launching a venture early next year.
Solve a market problem not a corporate problem
Venture building can be costly and difficult, which are reasons that there are few examples of successful ventures spun off by corporates. Jung says companies considering spinning off ventures should be clear about the reasons that they are choosing this route. He cautions against trying to solve a company problem with a new venture.
“Why are you building this new solution? The solution should not be geared towards your company, it should be geared towards the problem that you want to solve,” says Jung.
“You know the market; you know the value chain. You should have that picture in mind and target the bigger problem not the problem that you have in your own corporate,” says Jung.
He advises companies to draw on internal expertise to make sure that the technology is better than what already exists.
“You have that abundance of a big company supporting you – you have the laboratories and people talents. You should do enough testing and make sure the technology is different from the ecosystem technology,” says Jung.
He also advises corporates to make sure they staff the new venture with people outside of the parent organisation, who come from different sectors, regions and even cultures, so that the new company differentiates itself as much as possible from the corporate parent.
“Start like a startup; don’t remain as a corporate,” says Jung.
