Signs of Recovery in the Venture Market... New Investments of 1.8787 Trillion Won in Q1

'Diagnosis and Response Plan for Venture Investment Status' Presentation
High Investment Sentiment for Deep Tech Startups
Ministry of SMEs and Startups Plans to Develop Comprehensive Measures Within This Year

The venture investment market is showing signs of recovery. In the first quarter of this year, new investment amounted to 1.8787 trillion KRW, and fund formation reached 2.3628 trillion KRW, increasing by 6% and 42% respectively compared to the same period last year.

Oh Young-joo, Minister of SMEs and Startups, is delivering a greeting at the 'Startup Korea Fund Launch Ceremony' held on the 24th of last month at Hotel Naru Seoul M Gallery in Mapo-gu, Seoul.
[Photo by Yonhap News]

On the 13th, Oh Young-joo, Minister of SMEs and Startups, announced the "Diagnosis and Response Plan for Venture Investment Status" containing these details at the Economic Ministers' Meeting chaired by the Deputy Prime Minister for Economy. The amount of new investment in the first quarter grew by 68% in 2021 and 59% in 2022 compared to the same period the previous year. However, last year it fell by 55%, entering an investment winter.

The 6% increase in new investment in the first quarter compared to the previous year is evaluated as a clear recovery trend even when compared to major advanced venture investment countries such as the United States. When converted to dollars, domestic venture investment in the first quarter of this year increased by 15% compared to pre-COVID-19 (first quarter of 2020). In contrast, the U.S. and the U.K. saw decreases of 10% and 8%, respectively, compared to the first quarter of 2020.

The most notable feature is the heightened investment sentiment toward deep tech startups. A detailed analysis limited to investee companies of venture investment firms showed that the investment share in the top 10 deep tech startup sectors expanded from 31% at the end of last year to 40% in the first quarter of this year. The top 10 deep tech sectors include aerospace, artificial intelligence (AI) and big data, robotics, mobility, cloud and networks, and bio.

As investor interest in the deep tech sector grows, large-scale investments around 100 billion KRW are also continuing. In the AI sector, AI semiconductor company ‘Rebellion’ and generative AI service company ‘Upstage’ received investments exceeding 100 billion KRW. In the robotics sector, ‘Bear Robotics,’ founded by a Korean in the U.S., attracted 80 billion KRW in investment.

Photo by Ministry of SMEs and Startups

The Ministry of SMEs and Startups expects the growth trend in the venture investment market to continue this year but plans to prepare for uncertainties such as concerns over prolonged high interest rates. First, it will establish a market trend analysis system that includes various investment entities. In addition to the previously analyzed venture investment firms and new technology business financiers, global venture capital (VC) will be added to enable precise understanding of market conditions with timely and valid statistics. Along with this, information related to venture fund operation status under the ‘Venture Investment Act,’ such as returns, will also be analyzed and disclosed to the private sector.

To help domestic and foreign investors find suitable investment destinations smoothly across various fields such as region, technology, and global markets, various policy measures will be mobilized, including the creation of dedicated funds, customized investment attraction programs, and expanded information disclosure. A non-capital region dedicated fund will be established with a cumulative scale of 1 trillion KRW by 2026, and regular startup investment briefing sessions will be held in six metropolitan areas nationwide. Results of excellent startup technology evaluations will also be shared for VCs to utilize when discovering new investment targets. Additionally, a global fund will be increased by 4 trillion KRW by 2027, and the ‘K-Global Star’ program, which introduces carefully selected domestic startups by domestic and foreign VCs to overseas investors, will be held consecutively starting in Japan, followed by the U.S., Asia, and Europe.

A comprehensive plan covering fund formation, investment, and recovery will also be prepared within this year. Minister Oh said, “We will do our best to secure growth engines for our economy with timely policy measures while monitoring market conditions,” and added, “We will closely communicate with the industry to prepare a comprehensive plan to revitalize venture investment without any setbacks.”

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