Korea 2016 Venture Capital Fund and Investment a Record High

venture investment trend

On January 20th, the Small and Medium Business Administration in South Korea presented a report: “Arrangement of New Venture Fund and Venture Investment Trend in 2016.” According to the report, newly arranged venture fund last year was 17.9% higher than the fund from the previous year, with the total of 2.7B USD. It is the highest venture capital fund raised in the entire history of venture investments in Korea.

The world trend shows reduction in venture investments as the U.S. and Chinese venture investments decreased by 9.3% and 25.4% respectively. However, in Korea, with a total of 1.8B USD, venture investments increased by 3.1%, setting yet another record.

Investment in early stage companies (no more than 3 months old) comprises 36.8% of the total investment, which is 5.7% higher than the figure from the previous year. Nonetheless, the amount that takes up the investment in the later stage companies decreased by 6.5%.

With a total of 1.8B USD, new venture capital investments from private capital increased by 35.2% compared to the previous year. It is twice the figure in 2013. Private capital excludes mutual funds such as fund of funds, industrial bank and growth ladder funds. Furthermore, considering that the private capital took up 63.1%, which is 8.1% higher compared to the index from the previous year, of the overall venture capital fund, it is considered that the private capital played the most significant role in making 2.7B USD funds possible.

What does this all mean for Korea in 2017?

According to the Yeonhap News report on the 18th, the Korean government announced some optimistic goals that aim to improve business environments.

In their confirmed “Plans to Invigorate Business Establishment,” the government will work with private sectors to reach the goal of raising 3B USD venture capital fund and making 1.97B USD venture capital investments. This means that the government will increase the fund by 9% and investment by 5% compared to those in 2016.

The government will provide support to establish 50K cases of technology-based business establishment and to expand 500 startups to overseas. The government also plans to hold business competitions, whose entire process will be aired on TV.

With successful Korean startups we see today, Korea definitely has potential to cultivate further fruitful businesses. However, it is critical that entrepreneurs have the right motivation for building their startups. Furthermore, the government should prepare themselves with astute judgement and concrete knowledge to provide startups with effective, sustainable ecosystem for growth. Doing so, less administrative effort will be required while core values of raising a startup from micro to macro levels are all paid attention to.

Inspired from Platum and Yeonhap News

JunSu is a junior at Carnegie Mellon University majoring in Electrical and Computer Engineering. He enjoys meeting people from all over the world and exploring the role of technology in people’s daily lives. You can reach him at: junsu.jang@techforkorea.com

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