Even in the Venture Investment Freeze... Funds Flow to Unicorns and Profitable Companies

Unicorn and Profitable Companies Except Top 3 Investors
Leading in Bio and Medical Fields... Active Even Among Early-Stage Firms

Last year, venture capital (VC) investments were concentrated on 'unicorns (startups valued at over 1 trillion won)' and 'profitable companies.' This was because, amid prolonged investment winter due to high interest rates and economic recession, money flowed into 'reliable places.' In particular, this trend has continued following the 'Padoo incident' that broke out in the second half of the year.

According to 'The VC,' a venture investment information company, from January to December last year, the total number of investments in Korean startups and SMEs was 1,304 deals, with an execution amount of 6.73 trillion won. In 2022, there were 2,210 deals and 14.86 trillion won. This represents a decrease of 41% and 55%, respectively. Compared to the global market, the decline is also significant. Last year, global VC investment amounted to $345.7 billion (approximately 455 trillion won), down 34.9% from $531.4 billion (approximately 700 trillion won) in 2022.

Top 10 Fundraising Companies Mostly Unicorns or Profitable Firms

Among the top 10 companies by fundraising amount, except for Beyond Music Company (200 billion won), Rebellion (170 billion won), and Daeyoung Chaebi (110 billion won), the other seven companies were all either unicorns or 'profitable companies.' Musinsa (200 billion won), Helinox (140 billion won), Orkestro (130 billion won), and Donghwa Electrolite (120 billion won) were profitable companies as of 2022. Along with Musinsa, Kurly (120 billion won), Toss Payments (100 billion won), and Korea Credit Data (100 billion won) are unicorns. Investments were concentrated on companies that have already been recognized for significant value, are preparing for an initial public offering (IPO), or are actually generating profits.

Three companies that are neither unicorns nor profitable firms still hold the 'number one title' in their respective industries. Beyond Company, a music neighboring rights investment acquisition and management company, owns more than 27,000 music intellectual property rights (IP), the largest in Korea, including famous singers such as IU and Sung Si-kyung. Rebellion, a KT partner company, is the number one artificial intelligence (AI) semiconductor company in Korea. Daeyoung Chaebi is the leading electric vehicle charging service specialist company in Korea.

By industry, the most investments by both number of deals and amount were made in the bio and medical sectors. They attracted a total of 75.27 billion won (135 deals). Additionally, early-stage investments below Series A accounted for 37.5% by amount and 80.3% by number of deals, indicating active investment in 'early-stage companies.'

VCs Closed Their Wallets, Expecting a 'Rebound' This Year

Last year, excluding corporate-led VCs, the VC that made the largest investment was IMM Investment, which invested 177.3 billion won across 18 deals. Following were Ajou IB Investment (149.3 billion won), KB Investment (120.6 billion won), Korea Investment Partners (75.2 billion won), and Premier Partners (71.8 billion won). For the first time since the 2020s, no VC invested more than 300 billion won.

The number of new VCs entering the industry also significantly decreased. According to the Korea Venture Capital Association, new VCs dropped from 42 in 2022 to 13 as of the third quarter of 2023. Following the 'Padoo' incident, which sparked controversy over 'inflated listings' due to a large gap between the expected annual revenue (120.2 billion won) stated in the securities registration statement in July last year and the actual revenue (380 million won combined for Q2 and Q3), VCs have become more stringent in their investments.

This year, the venture investment industry is caught between pessimism that the 'lean season' will continue and optimism that the bottom has been reached, with a slightly prevailing expectation of market rebound. According to the 'VC Trend Report' recently published by Korea Venture Investment Corp., a survey of 654 domestic VC workers showed that 52.3% had a positive outlook, 24.9% negative, and the remaining 22.8% expected the market to remain similar to this year. Choi Hang-jip, CEO of Modafl and former head of Startup Alliance Center, said, "It is naturally difficult for the market to rebound suddenly, but with the expansion of policy funds and the possibility of economic improvement, I believe the situation is not worse than last year."

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