Retail investment amount in startups triples on-year in Q1

South Korea’s retail investors are increasingly more bullish in startups than in manufacturing or retail firms. 

The Ministry of SMEs and Startups announced Thursday that retail investors injected about 531 billion won ($418 million) into startups in the first three months of this year – a whopping 276% jump from the same period last year. The figure accounts for 20.7% of the total startup funding amount in the first quarter. 

In addition to acting as angel investors, individuals can make indirect investments in startups vis-a-vis venture capital firms. In other words, they can contribute to funds created by venture capitalists.

Angel investors are wealthy private investors focused on financing small business ventures in exchange for equity. What sets them apart from a venture capital firm is that angels use their own capital. 

“Due to the higher return on investment in promising startups when compared to the manufacturing and retail businesses, more private investors are taking interest in the sector,” a venture capitalist explained. 

For instance, Bon Angels Venture Partners put in 300 million won of initial investment into Woowa Brothers Corp., the operator of South Korea’s top food delivery app Baedal Minjok, commonly known as Baemin. Last year, the VC raked in more than 1,000 times that of the initial amount. 

The total amount of funds that the startup ecosystem is receiving is also on a consistent upward trend. In Q1 2022, the figure was at a record high of 2.8 trillion won, up 57.9% from the same quarter last year. 

By sector, investments made in information technology, retail, biotech and medicine startups accounted for 73.9% of the total.

A record-high number of 52 startups garnered more than 10 billion won worth of investment each.

Write to Joo-Wan Kim at kjwan@hankyung.com
Jee Abbey Lee edited this article.