Employees of Rebellion, a startup specializing in artificial intelligence (AI) semiconductor design, are meeting at an office in Seongnam, Gyeonggi Province. Provided by Rebellion
The Korean startup ecosystem is rapidly growing. The initial investment, which was driven only by the buds of startups, exceeded 1 trillion won, recording an all-time high. This is the result of increased competitiveness as experts with advanced technologies such as artificial intelligence (AI) and biotechnology are flocking to the start-up industry.
According to The VC, a startup investment analysis company, on the 2nd, the amount of investment that Korean startups attracted in Series A reached 1.49.8 trillion won in the first half of this year alone. It increased more than sixfold in five years from 158.7 billion won in the first half of 2016. Series A is an early stage investment that only considers the quality of manpower and business items.
The number of domestic startups that received Series A investment increased 2.6 times from 75 in the first half of 2016 to 192 in the first half of this year. The average investment has also increased. The average amount of Series A investment increased 2.6 times from 2.1 billion won to 5.5 billion won during the same period. There are cases in which 20 to 30 billion won is invested within less than a year after the establishment of the company. Venture capital (VC) and individual start-up investments are also on the rise. In the first quarter of this year, the size of individual investment associations, where a large number of individuals can gather and make indirect investment in startups, exceeded 1 trillion won.
A growing number of large companies are looking for new growth engines in startups. Conglomerates such as Hyundai Motor Company and Naver have virtually entrusted their new self-driving car and e-commerce businesses to startups, respectively. The three telecommunication companies (SK Telecom, KT, LG U+), CJ, and Shinsegae are busy finding startups to join in new businesses through D-Camp (banking youth entrepreneurship foundation) called the Startup Academy.
According to the Korea Venture Capital Association, as of the first quarter of this year, the amount of investment commitments for startups amounted to 1.45 trillion won. As startup investment increases, the virtuous cycle structure in which startups increase is also taking place. According to the Ministry of SMEs and Startups and the National Statistical Office, there were 59,000 start-up companies (individuals) under the age of 30 until April this year, up 19% from a year ago. This contrasts with a 14% decline in the total number of start-ups during the same period. Jeon Young-min, CEO of Lotte Accelerator, explained, “The strength of Korean startups is that the information technology (IT) environment is excellent and the service development speed is faster than other countries.”
20 billion bets on founding members only
6.7 兆 of investment to find ‘Second Baemin Toss’
Rebellion, a startup specializing in artificial intelligence (AI) semiconductor design, established in September last year, has invested more than 20 billion won in less than a year since its establishment. Products and services have not yet been released. Kakao Ventures, Shinhan Capital, Seoul National University Technology Holdings, and KCA Partners decided to invest based only on the history and technology of the founding members of Rebellion. Rebellion is a startup that brings together former global information technology (IT) companies such as IBM, Intel, and the world’s largest fabless (semiconductor design company) ARM.
Talent and money are flocking to the startup industry. Tens of billions of won is poured into early startups, and the corporate value of startups that are on a growth trajectory is rising significantly every year. Analysts say that the Korean startup ecosystem has entered a full-fledged growth trajectory.
‘It’s just a series A’ investment of tens of billions of won
Voyager X, a startup that launched various AI services, and I’m Neuron Bioscience, a bio startup that develops brain disease treatments, received an investment of 30 billion won in the Series A phase in June and May, respectively. Ringle English Education Service, which operates the video English education platform Ringle, and Panoros Bioscience, a bio-startup that develops anticancer drugs, recently received an investment of 20 billion won each in the series A phase.
Considering that the Woowa Brothers of ‘Baedal Minjok’, the No. 1 delivery app service, received an investment of 2 billion won in Series A in 2012, the situation is quite different. Even this was a huge amount of money that was a topic of discussion in the industry at the time. Recently, there are a number of startups that have attracted this amount of funds at an early stage. Starting this year, the number of startups that have invested more than 10 billion won in Series A has also increased significantly. Startups in various fields such as blockchain company Lambda 256 (17 billion won), ‘President’s Tax Accounting Service’ The Check (10.2 billion won), and AI English learning app Epopsoft (10 billion won) secured Series A investment of more than 10 billion won this year did.
The increase in serial entrepreneurs also increased the growth rate of the domestic startup ecosystem. It reduces the trial and error often experienced by startups. Se-dong Nam, CEO of Voyager X, Seung-myeong Lee, CEO of Disilo, a startup specializing in homomorphic encryption, the fourth-generation cipher, and Cham-sol Lee, CEO of Return Zero, an AI voice recognition startup, are all serial founders. Recently, startups have exceptional business potential. There are many examples of discovering new markets and producing meaningful results from the beginning of a business. The number of users of The Check service, which helps small business owners in digital transformation, exceeded 200,000 within 11 months of launch.
CEO Kwon Do-gyun, who established Korea’s first accelerator (a group that provides initial funds and mentoring to startups), said, “As Coupang and Woowa Brothers succeed greatly, startups can also make a ‘jackpot’ if they have good manpower and items. The perception that there is such a thing has spread among the MZ generation (millennials + generation Z).
The large increase in the ransom of existing promising startups is also contributing to the growth of early startups. Viva Republica, which operates the financial app Toss, attracted new investment worth 460 billion won last month. In the process, the company’s value has grown to $7.4 billion (about 8,391.6 billion won). It has soared about sevenfold from three years ago ($1 billion). An official from the VC industry said, “The return on investment for innovative startups is much higher recently than for manufacturers and distributors.” VC Bon Angels, which invested 300 million won in initial funds in Woowa Brothers, recorded a return of more than 1,000 times.
According to the Korea Venture Capital Association, the amount of new investment in startups last year reached 6.66 trillion won. This is more than double the 2.675.3 trillion won five years ago. There is also an analysis that government investment, which has continued for the past 10 years, has contributed to the overall growth of the startup market, regardless of whether there is a regime change. According to the results of an annual survey conducted by the Startup Alliance, a private institution supporting startups, among industry workers and job seekers, the overall evaluation score (out of 100) in the domestic startup ecosystem has risen from 55 in 2016 to 71.3 last year. .
Reporter Joowan Kim/Hankyul Seon/Minki Gu/Jongwoo Kim/kjwan@hankyung.com
