[StartupRecipe] VCs recap 2023 and their forecast for 2024

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#Weekly Funding Overview

[Jan.15 ~ Jan. 19]

The total funds raised by Korean startups of this week is KRW 134.6 Billion.

Company	Inudustry	Amount	Round	Investors
Ghostpass	Security	-	Pre-Series A	KODIT, Oracle Venture Investment
Workation	Premium tent	-	Seed	Series Ventuers
Genecraft	Bio	10 billion	Series A	Seoul Techno Holdings, Infobank, Cosine Investments
Adus	Autonomous mobility	-	Seed Bridge	Aventures, Futureplay
Beoble	Web3 social messenger	-		DWF labs
Four Pillars	Blockchain	700 million	Seed	Kakao Ventures, Hashed, Bass Investments
Dropthebit	Gen AI	-	M&A	Goodnote
Invalab	ESG	-	Seed	MYSC
Vience	Bio	-	Seed	Cnttech-DB
EK Games	Game	-	M&A	Neptune
Elice group	Edutech	20 billion		Vertex
Orangesquare	Fintech	10 billion	Series B	Mirae Asset Venture Investments, IMM Investments, Nau IB
Optimizerai	Game	1 billion	Pre-Seed	A16Z
HMC Networks	Senior care	4 billion		Samsung Ventures
Orcar	Mobility	-	Seed	Y&Archer
RANKINGFISH	Fishing service	-	Seed	Kangssen
Biocean	Bio	-	Seed	Yuhan Kimberly Green Impact Fund
My Real Trip	Travel	75.6 billion		BRV Capital Management, Korelya Capital, Partek Partners, Vanderbilt University, SV Investments, Samsung Securities, IMM Investments, Altos Ventures, Smilegate Investments
Groo	Plant Platform	-	Pre-Series A	Nudge Healthcare, Bon Angel Venture Partners
Fluent	AI Avatar	-	Pre-Series A	Korea Investment Accelerator, Sparklab
Funble	Fintech	-	M&A	SGA Solutions
ABIC	Consulting	-		PG Ventures
MISULLO	Art platform	-	Seed	PG Ventures
Pionelelctric	Energy	11.8 billion	Series A	Korea Development Bank, L&S Venture Capital, KDB Capital, Hyorim
Dynamic drug discovery	Bio	1.5 billion	Pre-Series A	Vine Ventures

#Major Funding

• Travel startup MyRealTrip secured a total of KRW 75.6 billion in investment. After breaking the monthly breakeven point (BEP) last summer, MyRealTrip now has KRW 1 trillion in annualized transaction volume.
• Elice Group, an educational practice platform, secured 20 billion won in investment. The company plans to become an AI solution company by leveraging its educational data and AI technology.

#Trend Analysis

VCs recap 2023 and their forecast for 2024

StartupRecipes spoke to more than 15 leading Korean investors (some anonymous) and asked for their views on investment in 2023 and 2024.

2023 witnessed a continuation of the conservative investment market that had commenced in the second half of 2022. A majority of investors, irrespective of their investment stage, deemed the investment market in 2023 as very bad, even worse than the previous year when they rated it poorly.

On the flip side, there were also many who remained positive, anticipating a return to normalcy from the overheated atmosphere of the past.”2023 was the year when everyone realized that the investment ecosystem was overvalued,” remarked Yang Sang-hwan, leader of NAVER D2SF. He added, “If you look at the past abnormal highs as an average, this year’s cold snap is correct, but it is a process of normalization.” Deokjoon Lee, CEO of D3Jubilee, concurred, stating, “Inflation and high-interest rates have dampened venture capital and reduced startup valuations, but in a way, it’s a process of normalization from an abnormal overheated state.”

For investors, there were pros and cons. “It was one of the most challenging years ever for the investment environment, and many investors changed their strategy to follow-up investments in their existing portfolios rather than looking for new companies to invest in,” said Homin Kim, CEO of SparkLab.

“It’s a positive for investors that valuations have adjusted to a reasonable level, but in Europe, it was difficult to source deals because many startups held out for a good investment time, and in Korea, many startups were still under pressure to adjust their valuations,” noted Pierre Joo, CEO of Korelya Capital Korea.

Similar to the previous year, investors are now seeking profitability rather than growth when making investment decisions. In the past, during times of abundant liquidity, growth-based investments were favored, but this strategy is no longer viable. Investors are now looking for teams with good fundamentals. While numbers have become crucial for conservative valuations, many investors prioritize the commitment of the founding team over immediate revenue or operating profit.

To overcome the downturn in the investment market, the role of the government has become crucial. The government has announced plans to support the investment market by creating a private fund of funds and providing incentives from 2022. Investors’ views on this range from positive to negative. Some see it as a positive step in revitalizing the investment climate during challenging times, while others express concerns about the excessive funding of equity funds.

There were signs of recovery in the second half of the year, with investments on the rise. However, investors do not consider this to be significant. They perceive it as dry powder running out, and the funds going to the frontrunners.

AI startups are the most likely to continue receiving investments, with more than 90% of investors choosing AI startups. Generative AI garnered a lot of attention in 2023 with the advent of OpenAI. Nevertheless, opinions on the competitiveness of Korean AI companies, especially in generative AI, were divided. Unlike other technology areas, the gap between Korea and overseas in terms of technological competitiveness is growing at a very fast pace. AI startups are considered potentially competitive, but their business performance is somewhat lacking. Despite this, there are predictions of opportunities for startups. It is mentioned that there is an opportunity for Korean startups because generative AI is a crucial field for large Korean companies to maintain global competitiveness.

Outside of AI, the outlook for investment in the environmental (climate, energy, ESG) sector is bright, with digital healthcare, manufacturing, and content/media also ranked as promising.The M&A and IPO markets are expected to remain challenging in 2024.

Little activity has been observed in the IPO market since 2022. The stock price decline after Padoo’s IPO is anticipated to have a negative impact on startups looking to go public with their technology.

Fortunately, investment in 2024 is expected to be better than in 2023. More than half of investors said they would increase their investments, and none said they would decrease. Most investors expect the second half of 2024 and the first half of 2025 to be a recovery period.