The venture investment market, which had fallen into a recession, is beginning to show signs of warmth. As the new government's commitment to nurturing the venture industry spreads expectations for revitalizing the recovery market, venture capitalists (VCs) are increasingly returning to invest in startups. Particularly, the scale of new investments last month nearly doubled compared to the previous month.
According to the 'Startup Investment Settlement' report released by the startup analysis platform InnoForest on the 6th, a total of 8.601 trillion won in new investments was made in 127 startups last month. Considering that 4.679 trillion won was invested in 85 startups in June, the investment scale in terms of amount increased by nearly 84% in just one month.
This data aggregates new startup investments made by domestic venture capitalists (VCs) and institutional investors throughout July, showing that 7.295 trillion won was invested in 125 startups, an 18% increase in investment scale compared to July of last year when 7.295 trillion won was invested in 125 startups.
The venture investment market was subdued through May this year. Due to economic recession, investments were restrained, and combined with the higher thresholds for going public, it was observed that the market was entering an ice age after a harsh winter. However, last month marked the beginning of a rebound, with instances of single investments exceeding 1.7 trillion won.
In the industry, evaluations suggest that venture investments, which experienced a downturn from 2022 until last year after the interest rate hikes, are now traversing the bottom phase of the recession. As the downward adjustment of valuations is largely completed, the atmosphere for VCs to actively consider new investments is forming.
For example, the game development company Kong Studios, known for the mobile adventure role-playing game (RPG) 'Guardian Tales,' recently raised 500 billion won from domestic VCs. While it was recognized with a company valuation exceeding 1 trillion won in 2021, it reduced its valuation to around 350 billion won to secure funding.
The expectations surrounding the new government's policies have become a tailwind for the venture investment market. President Lee Jae-myung had previously presented 'becoming a leading economic power in the world' as his primary pledge during the election, incorporating 'developing the venture investment market to realize a venture strong nation.' The government fund also increased the scale of its first formal investment by 30%.
By sector, the 'manufacturing and hardware' sector recorded the highest amount of investment, leading the market recovery. A total of 3.337 trillion won was invested, with more than half of that, 1.719 trillion won, concentrated in INNOX, a secondary battery materials company that manufactures and sells lithium hydroxide. This is the largest single investment case this year.
In terms of the number of corporations, the manufacturing and hardware sector had the most with 24 corporations, followed closely by AI, deep tech, blockchain, and healthcare and bio sectors. Particularly, with increased investor interest in generative AI and digital healthcare, the total number of investment-seeking corporations increased by more than 40 compared to the previous month.
By investment institution, Korea Development Bank showed the most active participation. It invested in a total of 11 companies, including Isol, Illimis Therapeutics, Law&Company, Frenu, and Everex. Following this, Korea Investment Accelerator and IBK Investment Bank also made contributions, leading the recovery trends in both private and policy finance.
Mark&Company, which operates InnoForest, noted, "Both the investment amount and the number of cases showed significant increases for two consecutive months in June and July" and added, "This appears to be the beginning of a recovery trend, and as the normalization of the initial public offering (IPO) market intensifies in the second half, the scale of venture investments is also expected to increase further."