[StartupRecipe] Seed Funding Slowdown Amidst Overall Investment Rise

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#Weekly Funding Overview

[June.10 ~ June.14]

The total funds raised by Korean startups of the week is KRW 22.1 Billion.

#Major Funding

• AI talent tech company Glorang has secured 9 billion won in investment, bringing its total accumulated investment to 25 billion won. The company has developed a psychological diagnostic test that standardizes abstract educational indicators such as thinking skills, creativity, and numeracy, and has secured 6,600 elementary, middle, and high schools as customers.
• Logistics robot startup Floatic has raised 5.2 billion won in investment. The company has developed ‘Floware’, a robot solution for automating logistics centers, and plans to fully commercialize the product in the second half of this year.

#Trend Analysis

Seed Funding Slowdown Amidst Overall Investment Rise

A unique trend is emerging in the Korean investment ecosystem: a growing disparity between startup funding and the number of deals. This year, while overall investment dollars have risen or remained flat, the number of deals has declined, particularly in the crucial seed funding stage.

This stands in contrast to the tightening observed in 2023, where a sharp decline in growth-stage investments caused a synchronized drop in both deals and total investment. This year, however, the decline in deals is driven primarily by a significant slowdown in seed funding.

Data from Startuprecipe reveals a consistent drop in seed investment deals since January, culminating in a staggering 53% plunge in May compared to January. Seed deals’ share of total investment has also shrunk, with a similar trend extending to Pre-Series A funding, which has fallen by more than 20 percentage points by May compared to early January.

Conversely, the share of growth-stage deals has increased, maintaining or even raising overall investment volume.

While seed investments contribute a smaller portion of total funding, they are vital for nurturing early-stage startups. The decline suggests a growing risk aversion among investors, who now favor companies with a track record over unproven early-stage ventures. Heightened uncertainty is also leading VCs to prioritize follow-on investments in existing portfolio companies rather than exploring new opportunities.

This shift indicates that early-stage startups face a more rigorous evaluation process to secure funding. The overall investment volume remaining stable implies ample capital availability for investors. However, the explosive deal growth witnessed in the past is unlikely to repeat. This signifies a transition towards a more selective and strategic investment approach, prioritizing qualitative growth over sheer deal volume within the Korean startup ecosystem.