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[StartupRecipe] Series C Funding on the Decline

#Weekly Funding Overview

[April. 24 ~ April. 28]

The total funds raised by Korean startups of this week is KRW 45.1 billion.

BelabelMaterials-SeedSeries Ventures
MybrainMedical device200 millionSeedAI Angel-CNT Tech angel partnership 2
XpannerContech6 billionSeries AKorea Investment Partners, KB Investment
RAFIQ CosmeticsBeauty-Series A bridgeMYSC
RD SolutionBattery recycling4.5 billionKolon Industry
GNG CellPettech-GrantTIPS
DelivusDelivery4.6 billionSeries AHana Ventures, Bass Investment, Kimgisa lab
StudiolabAI-Pre-Series ASpring Camp
GotojoyHotel Reservation1.5 billionSeries A3The Invention Lab
Seeann solutionMedical device-CGBIO
Ccarrot solutionsEdutech5 billionIBK Industrial Bank of Korea, TS Investment
ScatterlabAI15 billionSKT
TidepoolFishery data solution-SeedBon Angels Venture Partners, CNTTECH, 1Billion Partners
G2EHealthcare8.5 billionSeries BKolon Investment, Sema Investments, Daily Partners, Huons, Sori SB

Major Funding

  • ScatterLab has secured a strategic investment of KRW 15 billion from SK Telecom. The company specializes in creating AI agents that mimic human communication, including popular agents like Iruda and Kang Da-eun. Through this investment, SK Telecom and ScatterLab aim to collaborate on the development of emotional AI agent services with novel personas. Additionally, the two companies plan to work together in the realm of super-scale AI, such as the creation of a large language model (LLM) that can process knowledge and emotions.
  • Xpanner, a startup specializing in construction technology, has secured KRW 6 billion in funding. Established in 2020, Xpanner provides intelligent solutions for the construction industry and is getting ready to unveil its proprietary construction machinery automation solution, “Mango.” In the previous year, the company delivered cutting-edge smart construction solutions, including an integrated control system based on BIM technology, to specialized construction companies. Furthermore, Xpanner has established a North American subsidiary to expand its international business operations.
  • Ccarrot Solutions, the provider of the personalized foreign language education platform, Carrot English, has received a KRW 5 billion investment. Carrot English offers personalized services, including customized curricula, tutor matching, AI data analysis, and real-time feedback. With this funding, the company intends to expand its business from B2B to B2C.
  • Delivus, the operator of the same-day delivery platform DeliverRabbit, has received a KRW 4.6 billion investment. DeliverRabbit offers same-day delivery, return, and exchange services to e-commerce companies, utilizing regional clustering technology that enables swift delivery and return at the same cost as courier fees. With this funding, the company aims to expand its logistics hubs and extend its services to major cities across the nation.

#Trend Analysis

Series C Funding on the Decline

Growth-stage startups are currently facing a tough investment environment, especially when it comes to securing funding at the Series C stage. For startups, Series C is a critical time to seek additional funding for growth and expansion. Unfortunately, investors have cut back on growth-stage investments, leading to a decline in Series C investments. This trend highlights the increasing difficulty startups face in scaling on funding alone, and investor confidence in startup profitability is decreasing.

As a result, some soonicorn startups have had to implement austerity measures, such as restructuring, as investors become less willing to make follow-on investments. The decline in investment is evident in the data from Startuprecipe, which shows a 26% drop in the number of Series C-stage deals from 2021 to 2022. The decrease in Series C investments began in the second quarter of last year, and the amount of money invested dropped significantly in the fourth quarter of last year.

The first quarter of this year saw only seven Series C-stage investments, with just one Series C investment in April as of April 28th. This challenging investment environment makes it difficult to predict positive investment results this year.

In the first quarter of this year, more global venture capitalists (VCs) invested in Series C investments than domestic VCs. Strategic investors, such as large enterprises, financial institutions, and corporate venture capital (CVCs), dominated Series C investments. Among the VCs, Altos Ventures was the most active, participating in two of the seven deals and making follow-on investments.

One positive outcome of the decline in investment is that startups focusing on scale growth are bringing profitability along with them, with a growing number of companies reporting profits.

In response to the deteriorating investment environment, the government recently announced that it would invest an additional KRW 10.5 trillion won in ventures and startups. However, the total amount of investment is decreasing every month, making it challenging to predict when the market will recover.

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