The amount of domestic startup investment attraction fell for the second consecutive month from July to August, falling below KRW 1 trillion. Like the global venture investment market, domestic investment is shrinking. According to the Startup Alliance, the amount of domestic startup investment attracted was 836.8 billion won in July and 862.8 billion won in August. Compared to KRW 3.659 trillion in July last year and KRW 1.668 trillion in August, it decreased by 82.7% and 19.1%, respectively. Statistics show that startups, which are consumers, attracted investment at home and abroad, regardless of investment entities such as start-up investment companies, new technology business finance companies, and foreigners.

The decline in investment for the second consecutive month is attributed to a decrease in liquidity in the market as interest rates continued to rise, and a spread of conservative investment stance due to concerns over an economic recession. The global venture investment market, which was booming until last year, has shrunk sharply since early this year.

According to CB Insights, a global market research company, global investment in the first half was $25.1 billion, down 12.5% from $285.7 billion during the same period last year. Compared to $340.3 billion in the second half of last year, it decreased by 26.5%. In particular, as it entered the second quarter, the decline appeared to be larger.

Unlike the global trend, investment growth continued until the first half of the year in Korea. According to the startup alliance’s tally, investment worth 7.873 trillion won was made in the first half of this year, up 62% from the same period last year. In addition, venture investment performance in the first half of the year announced by the Ministry of SMEs and Startups also recorded KRW 4.61 trillion, up 24.3% from the same period last year.

Domestic investment in the first half of this year was different from the global trend because the fund was formed on the largest scale until early this year thanks to increased investment in the fund. However, the industry believes that it is only a matter of time before investment shrinks as unfavorable factors such as interest rate hikes and economic recession are inevitable in Korea. In fact, investment decreased significantly in the second half of the year. However, the number of investments was 135 in July and 151 in August this year, up 19 and 10 from the same month last year, respectively. Large-scale or late-stage investment has decreased, but early-stage investment is still interpreted as active.

The venture investment industry predicted that investment will continue to decline for a while. In particular, it is expected that it will be difficult to scale up venture and startup as late-stage investment and large-scale investment decrease. On top of that, there are concerns that the contraction of domestic investment will accelerate as the Ministry of SMEs and Startups reduces the budget for investment in the parent fund next year.

By fonuder

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