Venture investment in Korea’s startup ecosystem has shown a 24.3 % increase in the first half of 2022 compared to last year, according to data released by the Ministry of SMEs and Startups. It is a promising picture for Korean startups amidst the global economic meltdown.
The domestic venture investment market continued its relatively solid investment trend compared to the previous year. According to the data report, venture investment in the first half of 2022 was 4.6.1 trillion won ($3.56 billion), which was 782.1 billion won ($601 million) in the same period in 2021. In the first half of this year, the number of investments (2,815 cases), the amount of investment per case (1.42 billion won/$1.7 million), the number of investee companies (1,350 companies), and the investment per company (2.97 billion won/3.73 million) were also confirmed to be the highest in the first half of this year, respectively.
First quarter showed a record rise
The half-yearly growth has been because of a strong first quarter. The venture investment in the first quarter of 2022 recorded the highest of 2.82.7 trillion won ($219 billion). It is a 57.9 % increase from the previous record of 1.31 trillion won ($102 billion) in the first quarter of 2021.
In fact, the first quarter investments broke the 2 trillion won mark for the first time. In the first quarter of 2022, the number of investments (1402 cases), investment per case (1.49 billion won), the number of investee companies (688 companies), and investment per company (3.03 billion won) were also recorded as all-time highs.
However, in the second quarter of this year, a slight decrease was seen of about 4.2% compared to the second quarter of 2021, attributed to external economic uncertainties such as the US Fed’s interest rate hike and the prolonged Russian invasion of Ukraine. Venture capitalists have been holding on to investments over the global slowdown.
ICT companies get most investments
The venture investment by industry in the first half of this year, 2,928.8 billion won ($2250 million), or 73.1% of the total venture investment, was invested in the top three investment sectors: information and communication technology (ICT) service, distribution/service, and bio/medical.
These proportions were similar to the first half of the previous year (73.6%), but there was a change in the proportions of each industry. The information and communication technology (ICT) service sector received attention in the digital transition period even after the Coronavirus period, recording the highest in both the investment increase (609.3 billion won/$469 million) and the growth rate (69.0%), with 1.49 trillion won ($1.14 million) invested, the most among all industries.
On the other hand, investment in the bio/medical industry declined as venture capitalists waited for investment in bio companies due to the recent decline in stock prices of listed bio companies and the sluggish listing of bio companies.
In the first half of 2022, it was found that 176 funds, the largest number in the first half of the year, formed 4.43 trillion won($3.41 billion). This is an increase of 55.9% compared to the same period of the previous year, and like the investment, it broke the 4 trillion won ($3.1 billion) mark for the first time in the year’s first half. The number of companies that attracted more than 10 billion won ($7.7 million) is 91 in the first half of 2022.
Meanwhile, individual investment also increased significantly (+86.5%, +396.9 billion won/$305 million) compared to the same period last year, confirming that individuals actively participating in the stock market recently increased their interest in venture funds.