Last year, the amount of new venture investment was 6.764 trillion won, the second highest after 2021, when it was the largest ever. However, compared to 2021, 916.2 billion won decreased, or 11.9%, and the growth rate was reduced.
The Ministry of Small and Medium Enterprises and Startups announced the annual venture investment trend on the 29th. A total of 5286 investments were made in 2474 companies.
The amount of enterprise investment, which had been steadily increasing since 2012, turned to a downward trend last year, the first time in 10 years. This is due to the effects of complex crises such as high interest rates, high prices, and high exchange rates. However, the Ministry of Small and Medium Businesses and Startups evaluates that the rate of reduction in enterprise investment was not great compared to other countries even in the midst of such an economic crisis. According to the Ministry of Small and Medium Businesses and Startups, the amount of enterprise investment decreased by 30.9% in the United States and 40.7% in Israel last year.
An official from the Ministry of Small and Medium Enterprises and New Businesses explained, “Despite difficult economic conditions, domestic venture capital is actively looking for investment destinations and looking for investors.”
Investor sentiment, which had been steadily shrinking, froze in earnest in the fourth quarter of last year. The amount of new investment in the fourth quarter of last year was 1,326.8 billion won, down by more than 1 trillion won from the previous year. The third quarter, when investment began to shrink, also decreased by 807 billion won compared to the previous year. New investment has continued to fall since the first quarter of last year. Total new investment is the second highest ever, but every half year or every quarter, new investment has fallen to the 2019-2020 level.
According to industry, the bio and medical fields were hit hard. It decreased by 34.1% from the previous year, or gained a total of 571.2 billion. An investment of 1,105.8 billion was made, barely more than the amount of investment in 2019. The decrease in stock prices of listed companies and the strengthening of screening for special listing technology are cited as the main reasons for the decrease in investment.
Investment in the ICT services and distribution/service sectors, which account for the largest proportion of enterprise investment, also fell slightly. 2.3518 trillion earned was invested in ICT services and 1.3126 trillion earned in distribution and service. There was a reduction of 3.2% and 9.8% respectively.
On the other hand, investment in video, performance, music, and chemicals and materials increased compared to last year. In particular, a new investment of 460.4 billion won was made in the areas of video, performance and music, up 10.6% from the previous year. It is interpreted as the influence of the K-content trend and the recovery of movie viewing due to the distance.
According to business history, investment in early stage companies less than 3 years old was the only one that increased. Initial corporate investment recorded KRW 2.05 trillion, up 7.8% from the previous year. surpassing 2 trillion won for the first time. On the other hand, medium-term startup companies with 3-7 years of business and late-stage companies with more than 7 years of business experience decreased their investment by 21.6% and 13.3%, respectively.
Vice Minister of Small and Medium Enterprises and Startups Cho Joo-hyun said, “Despite the difficult environment such as record high inflation and high interest rates, the amount of venture funds formed for the first time exceeded 10 trillion won and was the investment is better compared to foreign countries, which is the result of our venture capital.” Therefore, the most important task is to melt the frozen investor sentiment.”
Enterprise Investment Status for the Last 5 Years (Unit: KRW 100 million, %, cases, companies)
Source: Ministry of Small and Medium Enterprises and New Businesses
Reporter Geunil Yoo ryuryu@etnews.com
