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[StartupRecipe] Korean Startup Investment Declined in Q1

#Weekly Funding Overview

[April.25 ~ April. 30]

The total funds raised by Korean startups of this week is KRW 337.6 billion.

Liahnson&CompanyExperts network-M&ADrama&Company
10wondersInfluencer commerce-Pre-Series ASeyoung Company
Tailer town3050 men's Fashion-SeedFindus
PixelicCMS Software1.9 billionPre-SeedBass Investment., Npartners, Translink Investment
RokyaAgriculture10 billionKurly
JarandaKids care31 billionSeries BKorea Investment Partners, Atinum Investment, Kakao Ventures, CompanyKPartners
MetafinesBio/Healthcare20 billionSeries BDSC Investment, BMI Korea, Korea Investment & Securities, Prodigy Investment, Meritz Securities, Meritz Capital, Industrial Bank of Korea, IP Ventures·Middle East Finance, SNS-Investment
ASWEMAKEMicro fullfillment-Pre-Series ANew Paradigm Investment
Witch companyNFT Metaverse-Bifrost
PerfitAI tech4 billionSeries ASnow, ATU Partners, Capstone Partners
Homes CompanyProphtech12.5 billionSeries BWoomi Construction, Shinhan Capital, DA Value Investment, Gunyoung, Big Basin Capital
GoodchoiceHospitality50 billionMirae Asset Capital
FeaturingInfluencer platform-Pre-Series AMagna Investment, CNT Tech
TextureSocial Reading-SeedSmartstudy Ventures
IhateflyingbugsEducation30 billionSeries CDeep dive partners, Murim Capital, Korea Growth Finance, Shinhan Financial, Hana Financial, Kyobo Group, IBK Capital
NearthabDrone20 billionSeries CIMM Investment, NH Investment & Securities
OutstandingMedia/Content-M&AE BROADCASTING
Rebuilder AI3D Modelling-Naver D2SF, KB Investment
EndandB2B Secondhand-SeedThe Ventures
FriendtripActivity Platform8 billionSeries B bridgeKyobo Securities CVC, Magna-Axis Investment, Nice Investment Partners, SJ Investment Partners, K-Bridge Investment
NeubilityRobotics23 billionSeries AIMM Investment, Shinsegae Signite Partners, Lotte Ventures, Samsung Wellstory, DS & Partners, KB Investment, Portitodot, SKT-Infinite Fund, Capstone Partners, Future Play, Shinhan Capital
Firstclass CompanyDating Platform-SeedAngels
261houseShared Cloth-SeedPNU Tech. Holdings, Chonnam National University holdings, Gwangju United Technology Holdings
CrossAngleCrypto asset research1.7 billionSeries BKB Investment, Shinhan Capital, Premier Partners, IMM Investment
Klim VenturesAccelerator5.5 billionNEXON KOREAKlim Ventures
SIRSMen's medical platform-Pre-Series AD Ventures, J-Curve Investment, Mashup Angels, Pearl Abyss Capita
Music cowFintech100 billionStick Investment PEF
IDESIGN LABEducation-Pre-Series ANewborn Ventures, Angles
BubblecloudPettech-SeedJB Ventures
AIOFARMAgriculture-SeedJB Ventures
WeAreFriendsTravel-SeedCNT Tech
Boosters CompanyHealthcare-M&ADrNow
BitglimStreaming Platform-GRANTTIPS
TalentreeHR-SeedKakao Ventures, Hashed, Nextrans
KodeboxEquity Management20 billionSeries BDunamu, IBX Partners, TBT, We Ventures, Daekyo Investment, ES Investor, KB Investment, HB Investment

Major Funding

  • Music Cow, a fractional investing platform for music copyright, has secured KRW 100 billion from PEF. The funds will be used to hire experts and reorganize businesses following the incorporation of institutional rights such as the Capital Markets Act.
  • Hotel-booking service GoodChoice (Yeogi Eottae) has received KRW 50 billion in funding, making it a new unicorn. The company was valued at KRW 1.2 trillion. The company’s sales have increased by 53 percent annually over the last five years, and its operating profit was KRW 15.5 billion last year, resulting in a trade surplus for the third year in a row. It launched a car rental and space rental service and set a plan to start an overseas travel service.
  • Childcare service Jaranda has received KRW 31 billion in investment, bringing the total amount raised to KRW 44.8 billion. Sales have tripled compared to previous year, surpassing KRW 10 billion in total. By 2022, the team will have completed its nationwide service expansion. It aims to be a one-stop app for kids, with both commerce and content. 

#Trend Analysis

Korean Startup Investment Declined in Q1

Global startup investment has begun to slow down. Changes have been detected in the investment ecosystem, which has continued to thrive despite the COVID-19 pandemic. According to PitchBook Data, US venture investment in the first quarter was $70.7 billion, down from $95.4 billion in the previous quarter and down from $77 billion in the same period a year ago. Data from CB Insights also showed that global VC funding declined by 19 percent in the first quarter of this year compared to the previous quarter.

What impact will the global situation have on the Korean venture market? According to the Startup Recipe, the total investment performance of Korean startups in the first quarter was more than KRW 3.49 trillion, the highest ever. The inflow of capital was more than double that of the same period last year. Furthermore, the Ministry of SMEs and Startups recently reported that for the first time in history, investment raised in the first quarter exceeded KRW 2 trillion. The investment fever seems to continue. 

However, since January, the amount of funds and the number of investments made each month in Korea have been declining. The monthly investment, which stayed above KRW 1 trillion in January and February, fell below KRW 1 trillion in March.

While seed investment and transactions exceeding KRW 100 billion increased, the number of companies raising KRW 10 billion or more decreased. In particular, those which attracted between KRW 40 and 100 billion dropped significantly. As companies that have raised more than KRW 100 billion account for more than 50% of total investment, the concentration on early-stage and late-stage companies is becoming more pronounced. In addition, based on the Startup Recipe’s investment data, it appears that a high growth curve in April is unlikely. 

Since last year’s fund was the largest ever, those funds will flow into the startups at any time. However, due to domestic and international threats, domestic investors are more likely to slow down their investments and not value the company as highly as last year. Domestic venture capital firms also advise in their investment outlook that we should not expect the same for this year when evaluating the value of startup companies.

They also warn startups about the cash burn. That is, startups should have enough cash to prepare for a crisis, the same as two years ago when the pandemic began. In addition, it is recommended that founders complete the financing as soon as possible. Although the investment performance and fund formation were both positive in the first quarter, the government advises one should have a long-term perspective as interest rate hikes can lead to a conservative investment or hinder fund formation.

We cannot make a clear decision on whether this will be temporary or long-term. Still, considering data and market conditions, it is necessary to establish an investment strategy, as this might lead to conservative investments.

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