Skip to content

South Korean Venture Investments Decline in Q1 2023: Factors and Industry Impacts

Photo by Stephen Dawson / Unsplash

South Korea’s Ministry of SMEs and Startups reported a 60.3% year-on-year decline in venture investment in Q1 2023, totaling KRW 0.9 trillion ($680 million).

Factors contributing to the decline include the ongoing economic slowdown, rising financing costs due to high-interest rates, increased uncertainty in the financial market, and a sluggish recovery market.

Nevertheless, despite the decline, venture investment in Q1 2023 increased by 13.2% compared to Q1 2019 and 14.0% compared to Q1 2020.

In comparison, the global venture investment performance declined by 55.1% in the US and 73.6% in Israel over the same period.

However, excluding two significant investments, such as the KRW 13 trillion mega-deal for OpenAI, the decline in the US was 75.1%.

Experts attribute the decline to shrinking liquidity due to short-term interest rate hikes by monetary authorities, a potential economic slowdown, and increasing uncertainty in the financial markets.

The entertainment industry attracted more investment year-on-year as demand for K-content continues to grow.

On the other hand, the ICT services, distribution and services, games, and biomedical sectors saw significant declines in investment.

Medium-sized companies (3 to 7 years old) saw the most significant drop in investment, while early-stage and late-stage companies were less affected.

Venture fund formation in the first quarter of 2023 amounted to KRW 0.6 trillion, down 78.6% year-on-year, down 13.8% from the first quarter of 2019, and up 12.2% from the first quarter of 2020.

Minister Lee stated that high-interest rates, high inflation, and global financial institution risks contribute to the contraction of venture investment globally.

Therefore, the government plans to announce measures to support the entire ecosystem, including funding for ventures and startups and efforts to strengthen competitiveness.

Please also read.

South Korea Invests In Super-Sized AI To Boost Global Competitiveness

Viva Technology Focuses On South Korea’s Thriving Startup Ecosystem

S. Korea Launches “Three Key Technologies Super Gap R&D Strategy”

South Korea’s Task Force Explores Strategies to Boost Competition in Telecommunications Market

South Korea’s Bold Vision: World’s Largest Semiconductor Cluster by 2042

South Korea and Saudi Arabia sign cooperation agreement to facilitate SMEs’ entry into local market

Ministry of SMEs and Startups Launches Task Force to Promote Cooperation with UAE.

S. Korea’s Ministry of SMEs and Startups shifts focus to privately-led innovation with government support in 2023

South Korea pledges $2.8bn annual investment to nurture deep-tech unicorns.

S. Korea Announces KRW 146.2bn Smart Manufacturing Project.