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[StartupRecipe] February Sees Steep Drop in South Korean Startup Funding, Indicating Tough Times Ahead

#Weekly Funding Overview

[Feb. 27 ~ Mar. 3]

The total funds raised by Korean startups of this week is KRW 28.8 billion.

MartsmartCommerce operating-Series BFreedsoft
MoseoriPersonal mobility100 millionSeedAngel investor
GrowvEducation11 billionSeries A bridgeKB Investment, SL Investment, TS Investment, Hyundai Investment Partners, Midas Dong-A Investment
SfreshFood distribution-M&ASmartfood Network
IwillmediaMedia-M&ADidim e&f
The service platformFintech-SeedKorea Investment Accelerator
LilliusSport content-Presto Labs
Alex designInterior design-M&ALefery
OnvacationTravel platform-Pre-Series AFast Ventures
HandleUsed car sale3 billionPre-Series AHankook Tire
FreegrowIndoor Navigation-IPS Ventures
GbikeMobility-Pre-Series CLink Asset Management, Mirae Asset Securities
VanamSemiconductor700 millionSeedSchmidt, Korea University Holdings
FaduFabless12 billionPre-IPOForest Partners, IBK Capital
VlogrVideo editting-Pre-Series ABlue Corner, Fast Ventures, Kodit
JunctionmedSenior healthcare-S Cubic Angels
MirrorboardCommunication tool-SeedKorea Investment Accelerator
JavisV2X-SeedSeries Ventures
Gomi Energy DeliveryEnergy Delivery2 billionLean Ventures
GreygoundPerfume brand-M&ABeutyselection
DentioDental brand-M&ABeutyselection

Major Funding

  • Fadu, a fabless semiconductor company, has accomplished a milestone by securing KRW 12 billion in pre-IPO investments and achieving a valuation of KRW 1.8 trillion, making it the first fabless semiconductor company to become a unicorn. The company was founded in 2015 and specializes in controllers, a core semiconductor used in data storage devices such as SSDs. Fadu has attracted major global tech companies as its customers. In the previous year, the company surpassed its break-even point by recording an operating profit of KRW 4 billion from sales of KRW 50 billion. Fadu intends to launch an IPO within this year.
  • Growv, an edtech company that specializes in early childhood education, has secured an additional KRW 5 billion in funding and successfully completed an 11 billion won Series A bridge investment. The company’s flagship product, Superv, offers personalized smart educational content in English, math, and Korean on a dedicated tablet designed for children aged 4 to 8 years old.
  • Handle, an e-commerce company specializing in the sale of used cars, has secured KRW 3 billion in investment from Hankook Tire. The firm’s flagship product, Carmmerce, enables customers to purchase pre-owned vehicles online within just 10 minutes using a simple mobile click, without the need to visit a physical dealership. As a strategic partner, Handle will collaborate with Hankook Tire.

#Trend Analysis

February Sees Steep Drop in South Korean Startup Funding, Indicating Tough Times Ahead

In February, South Korean startups experienced a significant decline in funding, with a total of KRW181.95 billion raised, almost KRW70 billion less than the previous month. This represents a 64% decrease compared to the previous year, and even lower than the KRW154.4 billion raised in 2020 before the investment boom, indicating a challenging investment environment.

Despite the number of investments remaining steady at 90, which is similar to January, it still falls below 100. The amount of funding per company has also dropped considerably, with most of the top companies at the top of the investment list receiving less than KRW10 billion.

Dot, a company that develops smart devices for the visually impaired, raised KRW13.4 billion and plans to expand globally, making it the top-funded company in February. Co-living house MGR followed closely, raising KRW12.5 billion and announcing its plans to expand its business.

Investor interest was focused on B2B SaaS companies in specific verticals, as well as startups focusing on future industries such as metaverse-based content companies, semiconductors, and sleep tech. Energy and environmental companies also saw a small but steady influx of funding. However, due to the downturn in the bio market, few investments were made in the sector. E-commerce companies in the fashion and food sectors saw some investment but not as much as in the past.

Early-stage funding, from seed to Series A rounds, accounted for 85% of the companies that disclosed their stage of investment. Series B and later rounds accounted for 11%, with growth-stage startups becoming increasingly less successful. The number of startups raising more than KRW10 billion decreased from ten in January to five.

Despite the worsening investment market, one unicorn has emerged – semiconductor fabless company Fadu. With a valuation of KRW 1.8 trillion, Fadu has become the first Korean unicorn in the fabless industry.

Although there were no significant mergers, startups that are facing difficulties operating in the current market are becoming attractive targets for acquisition. This year, we have also seen more news about startups restructuring their workforce. The investment climate remains challenging, even for companies expected to become unicorns in the near future.

In February, 15 startups founded by women raised KRW8.8 billion. The number of female-founded companies succeeding in getting investment is increasing, but the amount of money raised is not large, as most of the investment is in the early stages. In recent years, the number of female founders starting businesses based on their expertise has increased.

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