Venture Boom
Starting a business is getting popular under creative economy policy initiatives, and thus a growing number of start-ups related to the ICT sector are being established.
According to the Ministry of Strategy and Finance on Feb. 8, a total of 2.5382 trillion won (US$2.3148 billion) was set aside for venture capital funds in 2014, a year-on-year growth of 62 percent. The number was 822.8 billion won (US$750.4 million) in 2012 and 1.5679 trillion won (US$1.4300 billion won) in 2013, continuing the upward trend of last year.
The number of start-ups continued to increase, amounting to 30,021 as of mid-January. The figure for 1998 was only 2,042, but rose to 12,218 in 2006 and 24,645 in 2010. More than 300,000 new businesses have been created so far this year.
Against this backdrop, many successful cases of venture capital firms are noticeable. Increased investment dovetailed nicely with the desire to start a business, thereby leading to generating new profits.
Specifically, K Cube Ventures, which started to invest in start-ups in June 2012, saw 37 invested companies surviving among 39 firms. Most of them are considered to be showing significant results.
In addition, gaming companies FINCON and Red Sahara Studio and mobile shopping platform WishLink have entered the stage where it is possible to turn over more than 10 billion won (US$9.1 million) and post several billion won in profits. They are also widely acknowledged to have the potential to go public on the stock exchange right away.
An industry source remarked, “Local venture capital firms focus on generating profits by listing invested start-ups or selling an ownership stake in those venture businesses. However, they sometimes make a long-term investment.” The source added, “It is undeniable that experienced local venture capital firms played a large role in the growing importance of several start-ups.”
An increasing number of local start-ups use their new business as a springboard to attract investment and cultivate new growth engines abroad. Their efforts are significant in that they successfully raised funds from global venture capital firms, thereby proving their growth potential.
Yello Mobile received a US$100 million investment in Nov 2014 from Formation 8 Partners. The global venture capital firm cited the growth potential of the Korean mobile service provider in overseas markets as the main reason for its investment. Yello Mobile was worth 1 trillion won (US$911 million) at that time.
Since its foundation in 2012, Yello Mobile owns mobile shopping, advertisement, and travel platforms, growing its size as a comprehensive mobile media enterprise.
Woowa Brothers, which runs food delivery app Baedari-Minjok, also got a US$40 billion investment late last year from a consortium led by Goldman Sachs.