The size of new investments in domestic venture capital (VC) startups has decreased for three consecutive months this year. Due to ongoing concerns about political uncertainty and withdrawal, the investments plunged 47% in January and 28% in February, followed by a further decline of 17%. Fortunately, investments have concentrated on artificial intelligence (AI) service startups, mitigating the extent of the decrease.
On the 3rd, Mark & Company, which operates the startup analysis platform 'Forest of Innovation,' reported that during February, 81 startups secured new investments exceeding 409.4 billion won from domestic VCs. This represents a decrease of about 16.9% compared to the same period last year when 87 startups attracted 492.8 billion won.
This data aggregates all rounds of new startup investments from domestic VCs and institutional investors, from seed stage investments to pre-initial public offering (pre-IPO) fundraising, excluding transactions of existing startup shares among institutional investors. The investment amount per startup averaged around 5.1 billion won.
This year, domestic venture capitalists (VCs) appear to be maintaining a conservative investment stance. In January, investments amounted to 376.3 billion won, which is more than a 47% drop compared to the 712.3 billion won a year earlier, and in February, the new investment size fell to 284.8 billion won, a 28% decrease compared to February last year.
Earlier this year, many observers anticipated a gradual revival of the venture investment market. The Bank of Korea shifted its currency policy from tightening to easing, and at the end of last year, IMM Investment formed a large venture fund worth 300 billion won, contributing to a positive market sentiment.
Political uncertainties, including the impeachment situation, are reported to be affecting the contraction of the venture investment market. Furthermore, with the strengthening of listing review standards by the Korea Exchange, recovering the invested funds after listing has become challenging, leading VCs to encounter difficulties in finding new investment opportunities.
Nevertheless, more than 400 billion won in new investments were executed last month, marking the largest investment scale this year. This represents an increase of nearly 44% compared to the previous month, while in February, new investments had decreased by over 24% compared to the month prior. The investment decline compared to the same period last year has also narrowed to about 17% last month.
In the AI and deep tech sectors, over 122.9 billion won in VC funds was attracted, leading to an increase in investment size compared to the previous month. Notably, the generative AI platform 'wrtn' secured a new investment of 83 billion won, accounting for approximately 20% of the total new investment size last month.
The recent new investment in wrtn was part of a series B round that follows last June's pre-B funding, with major domestic VCs such as BRV Capital Management, Capstone Partners, and Woori Venture Partners participating as investors. Other foreign VCs like Goodwater Capital and Jet Venture Capital also joined the round.
Following wrtn, the company that attracted the most investment was the bio beauty corporation Cellak Bio, which specializes in developing and producing fillers, with a total investment of 54 billion won. Additionally, the logistics delivery service provider Buroong secured 30 billion won from Shinhan Investment Corp.
Meanwhile, last month, the entity that executed the most investments (in terms of number of deals) was an accelerator rather than a VC. The accelerator The Invention Lab executed the most with five investments (Urban Data Lab, Carbon & Nature, Derma Ray, The K Company, H Medical Gear). Following closely were Korea Development Bank and the accelerator CNT Tech.