The Ministry of SMEs and Startups (MSS) released a report detailing the latest trends in domestic venture investment and fund formation for the first quarter (Q1) of 2024.
<Key Findings>
Continued Growth: The positive trend observed in venture investment throughout 2023 extended into Q1 2024. Compared to the same period in 2023, new investments reached KRW 1.9 trillion (a 6% increase) and fund formation hit KRW 2.4 trillion (a 42% increase). This signifies stable growth, with a five-year average annual growth rate of 6% for investments and 23% for fund formation (2020-2024).
Outperforming Major Markets: When compared to major venture investment markets in developed countries like the US, South Korea shows a significant recovery trend. Converted to USD, domestic venture investments in Q1 2024 increased by 15% compared to the pre-COVID period (Q1 2020). In contrast, the US and UK experienced declines of 10% and 8%, respectively, during the same period.
Favorable Deep-Tech Investment: Investor sentiment towards deep-tech startups, particularly those in aerospace, artificial intelligence (AI), and robotics, is currently positive. A breakdown of venture capitalist investments reveals a rise in the proportion allocated to the top 10 deep-tech sectors, from 31% at the end of 2023 to 40% in Q1 2024.
*Deep-tech sector includes:➊ AI · Big data ➋ System semiconductors ➌ Robotics ➍ Mobility ➎ Cloud · Network ➏ Aerospace ➐ Environmental technology ➑ Quantum technology ➒ Biotechnology ➓ Next-generation nuclear power
The government anticipates the venture capital market’s growth trend to persist throughout 2024. However, ongoing uncertainties, such as concerns about prolonged high interest rates, necessitate close monitoring.
