"The 'Rich Get Richer, Poor Get Poorer' Phenomenon in VC... 'Deep Tech' as the Exit Strategy"

"Laplace×ETRI Deep Tech Investment Forum" Held on September 11
Small and Medium-Sized VCs Focus on Discovering Deep Tech Startups

The "rich get richer, poor get poorer" phenomenon in the venture capital (VC) industry is becoming more pronounced. While large VCs are attracting significant funds, small and medium-sized VCs are struggling with fundraising. In response, these smaller VCs are adopting strategies to identify promising deep tech investment opportunities and persuade limited partners (LPs) to invest.

On September 11, at Maru180 in Gangnam-gu, Seoul, the "Laplace × Electronics and Telecommunications Research Institute (ETRI) Deep Tech Investment Forum" drew over 100 investment professionals, highlighting the high level of interest. Under the theme "Deep Tech Deep Vision," six startups based on advanced technologies pitched directly to representatives from 12 major domestic VCs.

At the 'Laplace×ETRI Deep Tech Investment Forum' held on the 11th at Maru180 in Gangnam-gu, Seoul, Insoo Han, CEO of Laplace Partners, is giving a presentation. Photo by Seungjin Lee

Small and medium-sized VCs showed particular interest in the pitching session. Although the government recently announced measures to boost the venture ecosystem, such as expanding the Korea Fund of Funds, small and medium-sized VCs continue to face difficulties in fundraising. In contrast, large VCs, which are considered stable investment destinations, are being selected for LP investments relatively easily.

According to the Ministry of SMEs and Startups, the total amount raised by venture funds in the first half of this year reached 6.1681 trillion won, a 19.4% increase compared to last year. However, the number of funds established dropped by 12.5% to 358. An industry insider commented, "While the concentration of capital in large VCs has become a long-term trend, dozens of small and medium-sized VCs have not raised any funds at all this year."

As a result, small and medium-sized VCs are now taking the initiative to discover promising investment targets and use them to attract LPs. One VC CEO who attended the forum said, "There is more money circulating in the LP investment market than last year, but small and medium-sized VCs are not really feeling the benefits. That is why we are actively identifying high-profile investment opportunities to introduce to LPs and secure their commitments."

Another representative from a small and medium-sized VC remarked, "Deep tech is the answer." He explained, "Although the government is actively promoting the artificial intelligence (AI) sector, there are actually very few companies worth investing in. We are working hard every day to discover companies in the deep tech field, not only because the sector holds promise, but also because LPs are showing strong interest in deep tech."

Meanwhile, the six companies participating in this forum were selected for their unique technological capabilities in various advanced technology fields.

During the morning session, three companies presented: Hogreen Air (hydrogen fuel cell drones and power packs), NH Networks (smart city ICT solutions), and Witches (AR/VR metaverse content). In the afternoon session, three more companies took the stage: Geekfriends (IoT smart farm solutions), Dr. K Healthcare (digital healthcare platform), and Intflow (AI-based livestock data analysis).

Insoo Han, CEO of Laplace Partners, stated, "Although it takes a long time to develop technology in the deep tech sector, once a company establishes itself in the market, the high barriers to entry enable sustainable growth, which is why investors are paying such close attention."