The Venture Investment Market Continued to Thrive in 2017 1H
- Division
- 국제협력과
- Date
- 2017.08.09
- Writer
- 박강범
- File
- Headline
- Total Venture Investments in the Period Reached KRW 1 Trillion; the Number of Newly Created Funds Expected to Spike in 2H
The new Korean government has been showing its commitment to “become a nation that supports innovations by start-ups*” through its start-up and venture policies. With these policies stirring up expectations among entrepreneurs and investors, according to the Ministry of SMEs and Startups (the “MSS”), Korea’s venture investment market thrived in 2017 1H, as it did in the previous year.
The ministry announced the 2017 1H Venture Investment Trends on August 2, according to which the total venture investments reached KRW 992.6 billion, recording a 1.8% increase from the same period last year (KRW 975 billion).
The following is a breakdown of venture investments in 2017 1H.
① Investments by the Number of Years in Business
(Number of invested companies) The percentage of investments in start-ups (seven years in business or shorter) increased by 4.3% from the same period last year, recording 77.3%. Almost half (49.4%) of the invested companies were early-stage start-up companies (three years in business or shorter).
The increased investments in start-ups seem to have been supported by the Early-Stage Start-up Investment Funds that have been raised since 2013 (13 funds, worth KRW 293.4 billion).
(Invested amounts) Early-stage start-ups (three years or shorter) and three- to seven-year-old start-ups received investments of KRW 369.8 billion (37.3%) and KRW 292.8 billion (29.5%), respectively, similar to the amounts invested in the previous year (KRW 375.2 billion and KRW 292.6 billion, respectively).
② Investments by Industry
The percentage of investments in ICT manufacturing (4.4%), ICT services (21%), and electrics/machinery/equipment (12%) increased by 0.6%p, 2.1%p, and 2.2%p respectively, from the previous year.
The percentage of investments in film and TV / performing arts / recording industries (13.3%) and distribution/services (15.7%) also increased by 1.2%p and 2.9%p, respectively, from the previous year.
In the contrary, investments in chemical/materials industries (6%), bio/healthcare industries (15.5%), and the game industry (6.3%) decreased by 3.3%p, 6%p, and 1.8%p, respectively, from the previous year.
ICT convergence businesses enjoyed a stronger flow of investments based on their technical expertise related to the Fourth Industrial Revolution such as Big Data, the Internet of Things, and fintech.
Investments in bio ventures, on the other hand, seem to have been affected by the poor performance of listed bio companies after the Hanmi Pharmaceutical scandal.
In addition, the total value of new venture funds raised in 2017 1H was KRW 1,416.3 billion (56 funds), showing a 19.2% (KRW 336.7 billion) decrease from the same period last year (KRW 1,753.0 billion). The decline, however, was caused by investors who decided to delay new funds after the government announced its plan for a supplementary budget.
With the government’s proposal of the largest supplementary budget in Korean history, which stands at KRW 800 billion, the creation of new venture funds is expected to spike in 2017 2H; the total value of newly created funds is expected to be as high as 1.3 trillion.
As for the percentage of private investments, investments by private investors declined along with the overall size of venture funds. However, the number of private investors significantly increased from 210 to 253 (20.5% ↑), which indicates the continued expansion of the investor pool in the venture investment market.
The investor with the largest amount of investments in 2017 1H was Smile Gate Investment, which invested KRW 53 billion in the first half alone. The company that raised the largest fund was Soft Bank Ventures, which created a new fund worth KRW 121 billion.
Mr. Park Yong-sun, the head of the Venture Investment Division of the MSS, projected that “the supplementary budget will significantly boost the number of funds to be created in 2H, and the new funds will drive up investments in the same period. All in all, the total investments in 2017 are likely to exceed the record-breaking performance of the previous year.”
According to Mr. Park, “the ministry will propose the Business Investment Promotion Act (tentative title), which will lower the bars for fund management in Korea so as to attract private capital in venture funds while allowing for the provision of government grants to FoFs.”
The ministry announced the 2017 1H Venture Investment Trends on August 2, according to which the total venture investments reached KRW 992.6 billion, recording a 1.8% increase from the same period last year (KRW 975 billion).
The following is a breakdown of venture investments in 2017 1H.
① Investments by the Number of Years in Business
(Number of invested companies) The percentage of investments in start-ups (seven years in business or shorter) increased by 4.3% from the same period last year, recording 77.3%. Almost half (49.4%) of the invested companies were early-stage start-up companies (three years in business or shorter).
The increased investments in start-ups seem to have been supported by the Early-Stage Start-up Investment Funds that have been raised since 2013 (13 funds, worth KRW 293.4 billion).
(Invested amounts) Early-stage start-ups (three years or shorter) and three- to seven-year-old start-ups received investments of KRW 369.8 billion (37.3%) and KRW 292.8 billion (29.5%), respectively, similar to the amounts invested in the previous year (KRW 375.2 billion and KRW 292.6 billion, respectively).
② Investments by Industry
The percentage of investments in ICT manufacturing (4.4%), ICT services (21%), and electrics/machinery/equipment (12%) increased by 0.6%p, 2.1%p, and 2.2%p respectively, from the previous year.
The percentage of investments in film and TV / performing arts / recording industries (13.3%) and distribution/services (15.7%) also increased by 1.2%p and 2.9%p, respectively, from the previous year.
In the contrary, investments in chemical/materials industries (6%), bio/healthcare industries (15.5%), and the game industry (6.3%) decreased by 3.3%p, 6%p, and 1.8%p, respectively, from the previous year.
ICT convergence businesses enjoyed a stronger flow of investments based on their technical expertise related to the Fourth Industrial Revolution such as Big Data, the Internet of Things, and fintech.
Investments in bio ventures, on the other hand, seem to have been affected by the poor performance of listed bio companies after the Hanmi Pharmaceutical scandal.
In addition, the total value of new venture funds raised in 2017 1H was KRW 1,416.3 billion (56 funds), showing a 19.2% (KRW 336.7 billion) decrease from the same period last year (KRW 1,753.0 billion). The decline, however, was caused by investors who decided to delay new funds after the government announced its plan for a supplementary budget.
With the government’s proposal of the largest supplementary budget in Korean history, which stands at KRW 800 billion, the creation of new venture funds is expected to spike in 2017 2H; the total value of newly created funds is expected to be as high as 1.3 trillion.
As for the percentage of private investments, investments by private investors declined along with the overall size of venture funds. However, the number of private investors significantly increased from 210 to 253 (20.5% ↑), which indicates the continued expansion of the investor pool in the venture investment market.
The investor with the largest amount of investments in 2017 1H was Smile Gate Investment, which invested KRW 53 billion in the first half alone. The company that raised the largest fund was Soft Bank Ventures, which created a new fund worth KRW 121 billion.
Mr. Park Yong-sun, the head of the Venture Investment Division of the MSS, projected that “the supplementary budget will significantly boost the number of funds to be created in 2H, and the new funds will drive up investments in the same period. All in all, the total investments in 2017 are likely to exceed the record-breaking performance of the previous year.”
According to Mr. Park, “the ministry will propose the Business Investment Promotion Act (tentative title), which will lower the bars for fund management in Korea so as to attract private capital in venture funds while allowing for the provision of government grants to FoFs.”