The landscape of venture investment, including startups and other unlisted companies, has undergone significant changes after enduring a cold spell lasting more than a year and six months. Instead of Software as a Service (SaaS), the rise of manufacturing industries such as semiconductors has become prominent.
According to startup information firm THE VC on Jan. 3, 107 small and medium-sized enterprises (SMEs) and startups raised a total of 857.4 billion won (US$654.25 million) in the Series A stage during the second half of last year. The amount of funds raised and the number of companies securing investments decreased compared to the second half of 2022, when the investment freeze began in earnest, with 1.41 trillion won raised by 171 companies, and the first half of last year, with 894.9 billion won raised by 121 companies. However, the fundraising amount per company increased to 8 billion won, up from 7.4 billion won in the first half of last year.
The Series A investment that follows seed, or initial, investment serves as an indicator to assess whether the business model is functioning in the market. The signal is interpreted as a sign of recovery, starting with larger companies bouncing back, as the criteria for evaluating the profitability of business models become more stringent and the investment winter seems to be coming to an end.
Examining the investment landscape by sector, the ascendancy of manufacturing, as opposed to SaaS, is evident. The investment share in the semiconductor sector has more than doubled compared to the same period last year, reaching 13.9 percent, and has witnessed the highest investment. Following closely are the environmental, energy, pet-related, and fashion sectors, which have risen to the “top 5,” overtaking the fields of food, content, and enterprise from a year ago. Although the bio and medical sector has moved from the top position to second place, the investment share has actually increased.
Overseas investors have been concentrating on early-stage startups in the gaming and entertainment sectors. U.S. venture capital firm Griffin Gaming Partners invested 15 billion won in the development company of PC-based action massively multiplayer online role-playing game (MMORPG) Black Storm. Similarly, Japanese toy manufacturer Bandai invested 13.7 billion won in the webtoon and animation film production company, YLAB Studios.
K-pop agency Attrakt, the creator of the K-pop girl group Fifty Fifty, has successfully secured 10 billion won in investment from the Singapore-based investment firm Evergreen Group Holdings. In the 10.4 billion won investment round for Modhaus, renowned for establishing the K-pop girl group tripleS, international venture capitalists participated, including Global Brain from Japan, Reflexive Capital from the United States, Sfermion from the United States, and Foresight Ventures from Singapore.
The initial investment in startups from regular companies has significantly decreased. In the second half of last year, 32 large and medium-sized enterprises participated in Series A investments for 30 startups. This is half the level compared to a year ago when 67 large and medium-sized enterprises invested in 61 startups.