Editor’s Note
This article highlights the burgeoning market for lab-grown diamonds, which offer identical physical and chemical properties to natural diamonds but are created in a laboratory. As this sector gains significant traction in the jewelry industry, it presents a compelling area for early-stage investment.
(Seoul = Yonhap Infomax) Reporter Yang Yong-bi = The hottest area in the jewelry industry recently is undoubtedly the ‘Laboratory Grown Diamond’ market. Although they are artificial diamonds, they possess the same physical and chemical properties as natural diamonds.
Lab-grown diamonds are products that are ‘made’ rather than ‘mined,’ yet they have the same quality as natural diamonds. They are emerging as a new market in the jewelry industry because their price can be as low as one-tenth that of natural diamonds, and they can be mass-produced.
The global market is already moving swiftly. Legacy companies in the natural diamond market, such as De Beers and LVMH, which are involved in rough stone production and jewelry distribution, are already directly developing or investing in lab-grown diamond production technology for portfolio diversification.
The American lab-grown diamond development startup, Diamond Foundry, has been attracting attention from the investment industry for several years, being valued at $1.8 billion (approximately KRW 2.4 trillion) in 2021.
This year, domestic venture capital (VC) firms have also begun to focus on this market. In particular, Signite Partners, the CVC of the Shinsegae Group, which has significant overlap with the fashion and jewelry sectors, has shown the fastest movement among domestic venture capital firms.
Within Signite Partners, the reviewer who highly assessed the potential of the lab-grown diamond market is Manager Kim Joo-young. True to her background from the corporate venture team of Shinsegae International, a fashion company, she quickly grasped the changes in the jewelry industry.
While studying the market, Manager Kim believed that the utility of lab-grown diamonds was not limited to the jewelry sector. Since they are of the same quality as natural diamonds, they also have sufficient value for industrial use.
Convinced of the potential of the lab-grown diamond market, Manager Kim embarked on finding related companies in Korea. The company that caught her eye in her search for a domestic lab-grown diamond ‘rough stone’ was ‘KDT Diamond’.
Upon learning about KDT Diamond at the end of last year, Manager Kim simply sent an email. Through subsequent meetings, she confirmed that KDT Diamond possessed core capabilities across the entire value chain, from diamond manufacturing and processing to distribution.
CEO Kang founded KDT Diamond in 2016 and began knocking on the door of the lab-grown diamond market from 2020. The full-scale product development started last year when he collaborated with Professor Song Oh-seong from the Department of Materials Science and Engineering at the University of Seoul.
He proceeded with product development together with Professor Song, who has researched lab-grown diamonds for a long time. Subsequently, KDT Diamond acquired all lab-grown diamond-related patents held by the University of Seoul.
KDT Diamond’s lab-grown diamonds are produced using the CVD (Chemical Vapor Deposition) method, which has developed since the late 2010s. This method can produce diamond products with higher 3C (Color, Clarity, Carat) grades compared to products made with the HTHP (High Temperature High Pressure) method, which is prevalent in China, a major producing country. This means they can produce diamonds of better quality.
As KDT Diamond internalized the lab-grown diamond recipe and even launched a brand, building its own capabilities, Manager Kim became confident in its growth potential. Therefore, she expressed investment intent early this year, but CEO Kang was not actively seeking funding. He had already turned down investment offers from numerous investment firms.
To secure the investment, Manager Kim actively promoted the benefits Signite Partners could offer KDT Diamond. She particularly emphasized the potential for collaboration with Shinsegae, which is at the pinnacle of domestic fashion and distribution. She also highlighted that Signite Partners itself, as an affiliate of the Shinsegae Group, is a house that actively works to increase the value of its portfolio companies.
Ultimately, Signite Partners was able to invest KRW 2 billion in KDT Diamond in February this year. Using the funding as a stepping stone, KDT Diamond embarked on establishing its own rough stone processing factory in India. The plan is to build a manufacturing and processing value chain spanning Korea and India.
The plan is to produce the CVD-method lab-grown diamond rough stones, which use methane gas and hydrogen, in Korea, which has good infrastructure. The processing will then be carried out in India. This is because India has accumulated technological expertise in natural diamond processing and has low labor costs.
Manager Kim analyzed that the diamond market is currently at an inflection point. This is because the closure of major diamond mines is expected to increase within the next decade. She anticipates that a significant change will occur in the diamond market as the supply of natural diamonds decreases.
Manager Kim sees even greater versatility for KDT Diamond’s lab-grown diamonds. Since they are of the same quality as natural diamonds and have high thermal conductivity, they can also be used for semiconductor wafers, electric vehicle inverters, and communication materials.
Manager Kim, who joined Signite Partners from the Shinsegae International corporate venture team in 2020, currently serves as a key operating personnel for four funds. She has distinguished herself by investing not only in KDT Diamond but also in companies like the fitness apparel brand HDEX.