More than 5 trillion won in growth capital flowed into the venture investment market in the first quarter of this year. Large investments continued to gather around deep-tech fields such as artificial intelligence (AI), biotech, and aerospace.
The Ministry of SMEs and Startups announced trends in new venture investments and venture fund formation on the 17th. New venture investments in the first quarter came to 3.3 trillion won, up 24.1% from a year earlier, marking the second-largest on record after 2022. New venture fund formation reached 4.4 trillion won, up 30.7%, hitting an all-time high. Including investments in small and venture businesses by comprehensive financial investment companies, more than 5 trillion won in growth capital was supplied in the first quarter alone.
Compared with 2021, when rates were ultra-low, venture investment volume rose 34.3% and fund formation increased 57.2%. Policy finance commitments increased 82%, and private commitments rose 19.8%, driving market expansion.
By sector, ICT services accounted for the largest share at 21.4% of total investment, followed by biotech and medical (20.5%) and electric, machinery, and equipment (15.3%). The ICT services field was largely boosted by increased AI-related investments. In biotech and medical, large deals helped lift investment by 313.9 billion won, up 85.5% from the same period last year.
In ICT manufacturing, the growth rate (99.5%) was the highest, driven by increased AI Semiconductor investment. A representative case was Boss Semiconductor, a mobility AI chip design corporations. Boss Semiconductor secured large investments in the first quarter this year, following support in 2023 from the Ministry of SMEs and Startups (MSS) "Super Gap Startup Project" and another major round last year.
Investments in non-capital region corporations also continued. Of the 26 corporations that received investments of 10 billion won or more in the first quarter, 10 were local corporations. In South Gyeongsang, Songwol Technology, a composites parts corporations for aerospace, attracted a large investment, while Daejeon and North Chungcheong saw active biotech and medical investments.
By years in operation, investment volumes increased for both corporations with seven years or less and those over seven years, but early-stage corporations of three years or less saw a decline. The Ministry of SMEs and Startups (MSS) sees the expansion of deep-tech-centered investments as drawing capital to corporations with longer operating histories. In non-deep-tech, more than 75% of investments were concentrated in corporations with seven years or less in operation, including those three years or less (37.3%).
The Ministry of SMEs and Startups (MSS) is moving to expand early-stage startup investments by allocating 356.2 billion won to the startup-early field in this year's parent fund commitment program and giving preference to funds with high ratios of investment in early corporations.
Minister Han Seong-sook of the Ministry of SMEs and Startups (MSS) said, "Following last year's record second-highest annual venture investment performance, both venture investments and funds grew sharply in the first quarter this year," adding, "The Ministry of SMEs and Startups will steadily push to expand parent fund commitments and improve systems to incentivize private investment so that promising small and venture businesses can grow into unicorns."