- Industries and Sites
- Service Industries
Stable Financing Conditions for Ventures/Innovative Companies CloseStable Financing Conditions for Ventures/Innovative CompaniesThe venture investment in Korea was USD 3.7 billion (KRW 4.27 trillion) in 2019, up 25% YoY.
It was the first time to surpass USD 3.5 billion (KRW 4 trillion). Investment in areas related to the Fourth Industrial Revolution,
such as health care and artificial intelligence, accounted for 40% of all investment.
The number of companies that received venture investment increased by 15% YoY, and the investment also expanded to become large scale(Unit : USD billion, companies)
Status of Venture Capital Firms and Investment Performance Category venture capital firms investment associations Number of associations Investment amount Investment Amount of new investments Number of companies※ Source: Korea Venture Capital Association
※ Footnote: Investment associations include Venture Fund and Korea Venture Fund.
※ Footnote: Associations calculated based on new investment amount per year, and the figure may differ depending on the date of calculation.Meanwhile, the number of Buyout PEFs that were created in 2019 reached 206, which is the largest ever and is up 8 funds from the previous year.
The PEF investment scale was USD 13.8 billion (KRW 16 trillion), which remarkably exceeded the USD 10 billion (KRW 12 trillion) average investment amount from the past three years.※ Source: Financial Supervisory Service
The Advent of the Fourth Industrial Revolution and the Increasing Need for Market-friendly Corporate Restructuring OpenThe Advent of the Fourth Industrial Revolution and the Increasing Need for Market-friendly Corporate RestructuringThe scale of venture capital in Korea has reached the highest value in the past few years, and the market is so vitalized that it has even been called the second boom period of venture.
The emergence of new industries related to the Fourth Industrial Revolution has caused industrial restructuring, which in turn has offered new opportunities.
Korea has strong political willingness to promote venture companies related to the Fourth Industrial Revolution as the new economic leaders of Korea.Buyout PEF has also shown continuous growth. It is expected that any long economic recession that might occur in the future could rather provide even more investment opportunities to PEFs.
Compared to the past, Korean companies are more likely to restructure preemptively, and fine offerings will increase during
the economic recession and significantly improve the investment profitability of PEFs.
Global Venture Capital and PEFs Make Active Investment in Korea OpenGlobal Venture Capital and PEFs Make Active Investment in KoreaIn the case of private equity funds, more global investors, such as the Government of Singapore Investment Corporation (GIC)
and the Canada Pension Plan Investment Board (CPPIB), have participated in domestic PEFs as LPs.
Major foreign PEFS are already very active as key players in the Korean M&A market.Direct investment from foreign venture capital and private equity funds to Korean ventures and new companies has also been more vitalized.
Altos Ventures from Silicon Valley, in particular, has formed an exclusive investment fund for Korean venture companies
to further promote investment activities.Global PEFs’ Investment in Korean Companies
Global Venture Capital Investments in Korean Companies
- Overview: Korea’s largest medicine and medical supplies distribution company
- Foreign investor: Blackstone (acquired for USD 10 billion, April 2019)
- Overview: Leading building management company
- Foreign investor: Affinity (acquired for USD 550 million, June 2019)
※ Source: Chosunbiz (March 2018), IT Chosun (September 2019), Mergermarket
Service: Food delivery app (Woowa Brothers)
- Total investment amount: USD 4.5 billion
- Major investors : Goldman Sachs (US) consortium, Hillhouse Capital (China) consortium, Government of Singapore Investment Corporation consortium, Delivery Hero (Germany)
Service: Remittance app (Toss)
- Total investment amount: USD 700 million
- Major investors : Paypal (US) consortium, Goodwater (US) consortium, Kleiner Perkins (US) consortium
Service: Cloud software
- Total investment amount: USD 200 million
- Major investors : Legend Capital (China) consortium, Singapore STT
Service: Real estate brokerage app
- Total investment amount: USD 200 million
- Major investors : Goldman Sachs (US) consortium
Service: Messenger for companies
- Total investment amount: USD 100 million
- Major investors : Shasta Ventures (US), etc., Iconic, Tiger Global Management
Service: Night delivery app (Market Kurly)
- Total investment amount: USD 300 million
- Major investors : Sequoia Capital China, etc., Hillhouse Capital (China) consortium
Laws Improved for a Venture Investment Ecosystem OpenLaws Improved for a Venture Investment EcosystemThe Korean government enacted the Act on the Promotion of Venture Investment in February 2020 by easing off and integrating two different acts on venture company and SME establishment.
The new act has paved the way to vitalize investment in start-ups and venture companies.
Accelerators (start-up planners) can form venture investment associations (investment funds) if certain conditions are met, such as experts and capital.
The minimum fund investment has been lowered from USD 2.6 million (KRW 3 billion) to USD 1.7 million (KRW 2 billion).In February 2020, the Act on Special Measures for the Promotion of Venture Businesses was revised to remove requirements for guarantees and loan performance and rather evaluate technical innovation and growth potential. As a result, a new environment has been established where venture companies can be verified based on professionalism and fairness in the private market.Furthermore, Korea has been facilitating financing for innovative companies from establishment to growth through Business Development Companies (BDC),
with an aim to create an ecosystem for venture investment and support innovative finance systems.※ Source: Financial Services Commission, Capital Market Policies for Promoting Innovative Finance, March 2020
창업투자회사(투자조합) 현황 및 투자실적 표로 구분, 년도(2010 ~ 2018년) 정보제공 Category 2017 2018 2019 2020 Registration of Accelerators and Investment Amount(₩) 16,300,000,000 65,800,000,000 159,600,000,000 225,300,000,000 Registration of Accelerators and Investment Amount($) 14,414,063.88 59,801,872.22 137,193,549.50 193,669,841.49 Registration of Accelerators and Investment Amount(USD million) 14 60 137 194※ Source: Ministry of SMEs and Startups
※ Support: Korea Economic Research Institute
Finance/Financial Affairs PM
Kim Kyuh Bom Service Industry Promotion Team