The domestic venture investment market has moved from a winter period into an ice age. Since the beginning of the year, the scale of new investments into domestic startups has continued to decrease compared to the same month last year, shrinking nearly 74% last month compared to a year ago. This marks a fifth consecutive month of decline.
According to venture investment market trends aggregated by ChosunBiz and the startup analysis platform ‘InnoForest’ on the 4th, approximately 220.5 billion won in new investments were executed last month, representing a 73.7% decrease compared to the same month last year. The number of startups attracting investments during the same period fell from 79 to 58.
This reflects the tally of new investments by domestic venture capital firms and institutional investors in startups from the seed stage to the pre-initial public offering (pre-IPO) stage, showing a 27.6% decrease in the amount compared to the previous month when 69 startups received 304.6 billion won.
Analysts point to an unprecedented downturn in the venture investment market this year. Along with investment contraction due to rising interest rates and economic recession, the upward adjustment of IPO thresholds and poor performance in the mergers and acquisitions (M&A) market are making it increasingly difficult to recover investment funds, effectively freezing the market.
The scale of new investments by domestic venture capital firms and institutional investors in startups decreased to 376.3 billion won in January, down 47% compared to the same month last year, and has now declined for five consecutive months. Notably, the number of companies attracting investments last month was the lowest so far this year.
Among domestic venture capitalists, there are claims that there are no investment opportunities. This is because there continues to be a gap in the perception of corporate value between investors and startups, and uncertainty regarding recovery plans could lead to difficulties in recovering invested funds, thereby increasing concerns over liquidity.
Given this situation, an investment concentration phenomenon is emerging. Only selective investments in later-stage corporations or in areas such as artificial intelligence (AI) and deep tech are being made. Last month, the top five corporations in terms of investment attracted nearly half of all investment.
For instance, Pluglink, a startup in the electric vehicle charging business that attracted the largest single investment of 45 billion won last month, was in its Series B round of fundraising. Additionally, Curaum, which secured the second-largest investment of 20 billion won, was in its Series C fundraising.
Early-stage investments have focused on AI and deep tech. In the investment status by category last month, the AI and deep tech sector attracted 10.4 billion won, which lagged behind healthcare and bio (76.4 billion won; 9 cases) and mobility and transportation (62.3 billion won; 5 cases), but had the highest number of cases at 13.
Hong Kyung-pyo, the CEO of Mark&Company, which operates ‘InnoForest,’ noted, “The total amount of investments in May decreased somewhat compared to the previous month,” and added, “Instead of focusing on quantitative figures, it has become a time for startups to adjust their unique growth strategies based on qualitative trends.”
Meanwhile, the venture capital firm that executed the most investments last month was identified as Hyundai Investment Partners. Hyundai Investment Partners invested in four companies: Bon Systems, Roovook, EYL, and FITT. Following that, Smilegate Investment and Schmidt invested in three companies each, ranking them jointly in third place by the number of investments.