Venture capital investments hit all-time high in S.Korea

Venture capital investments in South Korea are seeing a speedy recovery after facing a setback earlier this year due to the COVID-19 crisis. Over the past month more than 10 startups have been able to secure around 10 billion won ($9 million) each, with some even raising over 100 billion won in the period, signaling a boom in the country's startup industry.

Bucketplace, operator of home interior app OHouse, raised 77 billion won during the month, while game developer Npixel Co. and fintech startup Balance Hero each secured 30 billion won, according to the venture capital industry on Dec. 6.

Cloud platforms were popular among VC investors with cloud provider Megazone Cloud Corp. securing a total of 140 billion won from 23 investors including the Korea Development Bank (KDB), NAU IB Capital, KB Investment and Stonebridge Capital Inc.

Flex Corp., a cloud-based human resource management service, also fetched 10 billion won in Series A funding last month from investors including IMM Investment Corp.

In line with rising demand for streaming videos, multi-channel network (MCN) companies that manage video platforms and streamers saw money flow in, as Seoul-based MCNs Sandbox Network Inc. and Different Millions secured 50 billion won and 15 billion won, respectively, during the month.

Industry watchers say that VC investors are getting an idea of what companies will perform in the post-coronavirus era, as they see funds flow into the contactless services, IT platform, cloud and game sectors.

VC firms have been wary of making fresh investments since the COVID-19 outbreak earlier this year. Most firms opted for follow-on investments as VC investments that posted an uptrend over the past five years dropped by 17.3% in the first half of the year compared to the year-earlier period.

Yet, things took a turn in the third quarter with VC investments hitting an all-time high of 1.2 trillion won ($1.1 billion), increasing 6% year on year and 34.8% quarter on quarter, according to the Ministry of SMEs and Startups.

“We’re expecting to see VC investments reach record highs in the fourth quarter as well," said Lim Jung-wook, the co-chief executive of TBT Partners, a Seoul-based VC firm. “Investors are interested in startups that can take lead in the digital transformation.”

Significant changes arising from the spread of COVID-19 may be more advantageous for startups than traditional companies, according to Lee Joon-pyo, the chief executive at SoftBank Ventures Asia.

“We’re looking at the high growth potential of companies that can effectively address new demand – such as remote work, healthcare and edutech,” said Lee.

Industry watchers say the recent stock market rally also played a positive role in boosting investment activity as VC investors have greater chance of a profitable exit if circumstances favor an initial public offering.

Write to Han-jong Choi at onebell@hankyung.com
Danbee Lee edited this article.