Funding Completely Cut Off in the Startup Sector... May Investment Amount Hits Lowest This Year

The startup investment market, which has been frozen since last year due to the impact of US interest rate hikes, shows little sign of recovery. This month, the investment amount fell below 200 billion KRW, marking the lowest point this year.

On the 31st, Startup Alliance reported that the total domestic startup investment amount for May, as of the previous day, was 172.4 billion KRW (36 deals). This is one-fifth of the 830.9 billion KRW (188 deals) invested in May last year. Startup investment this year slightly rebounded from 257.9 billion KRW in January to 347.2 billion KRW in March but slipped to 263.9 billion KRW in April. Considering the remaining days, it is unlikely that the total investment amount this month will surpass last month's level.

The largest "big deal" this month was by Kurly, the operator of the dawn delivery market Kurly, which raised 120 billion KRW from Hong Kong-based private equity firms Anchor Equity Partners and Aspex Capital in its second pre-IPO round. Kurly, which delayed its IPO due to a decline in corporate value and losses, is interpreted as urgently seeking capital injection. Kurly recorded operating losses of 217.7 billion KRW in 2021 and 233.4 billion KRW last year. It also posted an operating loss of 30.5 billion KRW in the first quarter of this year.

Excluding Kurly's investment this month, startup investments are practically "few and far between." Except for Ditonic, a spatiotemporal data specialist company (13.4 billion KRW), and Callgate, a visible automatic response system (ARS) service provider (10 billion KRW), there are almost no companies that attracted investments exceeding 10 billion KRW. Last month, eight companies, including Progreen Tech, a specialty precision chemical materials manufacturer (36.2 billion KRW), and Nudge Healthcare, operator of Cashwalk (30 billion KRW), secured investments over 10 billion KRW.

Amid this, startup mergers and acquisitions (M&A) remain active. From January to April this year, there were 21 startup-related M&A deals, compared to 27 in the same period last year. Last month, game company Neptune acquired digital advertising startup Remake Digital. Founded in 2018, Remake Digital has worked on projects such as Kakao's North American webtoon and web novel platforms 'Tapas' and 'Radish,' Pearl Abyss's MMORPG 'Black Desert,' and Com2uS's mobile game 'Summoners War.' Internet broadcasting company AfreecaTV acquired billiards specialist Five & Six last month. Five & Six's subsidiary Cusco supplies the official scoring system for 3-cushion billiards tournaments organized by the World Carom Billiards Federation (UMB) and the Korea Billiards Federation (KBF). They are also promoting businesses such as a billiards specialty community platform 'Quni App,' billiards equipment shopping mall, ranking system, and content distribution.

As corporate market values gradually decline, M&A is expected to become even more active. An industry insider said, "There are startups that raised hundreds of billions of KRW in investments last year but have not spent a single won," adding, "If it is judged that they will create synergy with existing businesses, aggressive betting will follow."

This content was produced with the assistance of AI translation services.