Q1 Venture Investment Down 4.2% Due to COVID-19 Impact... "Crossroads for a Major Shift to the Digital Economy"

Announcement of Venture Investment Performance for Q1 2020 and Venture Investment Industry Meeting
Minister Park Young-sun Meets with Institutional Investors Including Pension Funds and Financial Sector

[Asia Economy Reporter Kim Cheol-hyun] New venture investments in the first quarter of this year decreased by 4.2% compared to the same period last year. Although there was a slight decline due to the impact of the novel coronavirus disease (COVID-19), the figures were relatively favorable compared to initial concerns. The Ministry of SMEs and Startups (Minister Park Young-sun, hereinafter referred to as the Ministry) announced the first quarter venture investment performance, including this information, on the 23rd at the Korea Federation of SMEs. A meeting was also held with key members of the venture investment ecosystem, including institutional investors, to discuss measures to revitalize investment.

New venture investments in the first quarter amounted to 746.3 billion KRW, down 4.2% from 778.9 billion KRW in the same period last year. The video, performance, and music sectors (down 58.5%) and distribution and service sectors (down 39.2%) showed a trend of more than 30% decrease compared to the same period last year due to a decline in film and broadcasting production and an increase in non-face-to-face online distribution. On the other hand, the bio-medical and information and communication technology (ICT) service sectors, which have been spotlighted as promising industries amid the COVID-19 situation, made significant progress. Investment in bio-medical companies in the first quarter was 224.4 billion KRW, a 32.0% increase compared to the same period last year, and investment in the ICT service sector also rose by 21.9%.

New venture funds were raised at 504.8 billion KRW during the first quarter of this year, a 21.3% decrease compared to the same period last year. Due to COVID-19, most face-to-face meetings for fund formation by investors were postponed, and increased uncertainty dampened investment sentiment.

On this day, Minister Park Young-sun held a meeting to review the venture investment market in response to COVID-19 along with the announcement of venture investment performance. Institutional investors such as the National Pension Service, Korea Technology Finance Corporation, Yellow Umbrella Mutual Aid Association, and Military Mutual Aid Association, as well as institutional investors including Korea Development Bank, Kookmin Bank, Shinhan Bank, Woori Bank, Hana Bank, Mirae Asset Daewoo Securities, and KB Securities attended, along with market participants such as the Korea Venture Capital Association, Korea Venture Business Association, Korea Startup Forum, and global venture capitalists.

At the meeting, Minister Park reintroduced the venture investment incentive package announced at the emergency economic meeting presided over by the President on the 8th, along with the first quarter venture investment performance, and requested active investment from institutional investors. She also listened to the difficulties faced by companies and institutional investors in the venture investment field and discussed solutions. Minister Park urged, "With the mindset that crisis is opportunity, I ask institutional investors and venture capitalists to actively invest for the great transition to a digital economy and a smart Korea."