Discover Korea’s Startup Investment Trends: Angel Investment

 

This is the second post in our 4 series of investment trends. Born2Global discusses about venture capital investment, angel investment, exit, and crowdfunding. Stay tuned for the upcoming 3 series.

 

 

Angel investment records 11-year high

 

In 2015, the amount of angel investment exceeded USD 90.91 million annually, which is the highest it has been since 2004. Moreover, angel investment has recorded positive growth for the fourth consecutive year since 2011. According to the Small and Medium Business Administration’s report on angel investment trends, the total amount of angel investment made in Korea in 2015 was USD 127.18 million, reaching a record high in the 11 years since 2004, when total angel investment dropped to USD 42.09 million from USD 42.09 million in 2003 with the collapse of the venture bubble.

 

Personal investment associations have been making a steady rise as well. In 2015, there were 89 personal investment associations, with a total investment amount of USD 40.55 million, representing increases of 61.8 percent and 9.8 percent from the 55 associations and USD 36.91 million in total investment in 2014, respectively. In the first half of 2016, the number of angel investors’ personal investment associations exceeded 100, showing a continuous increase.

 

Number of angel investors exceeds 10,000 in 15 years

 

The number of angel investors registered with the Angel Investment Support Center in the first half of 2016 was 11,314, recording an increase of 19.5 percent from the 9,468 registered in the previous year and exceeding the 10,000 milestone. By occupation, the largest proportion of angel investors were in the service industry (22 percent, 2,488 investors), followed by finance (15 percent, 1,701 investors) and manufacturing (11.4 percent, 1,289 investors).

 

This was the first time in 15 years, since the first venture boom in 2001, that the number of angel investors exceeded 10,000 (12,002 investors). After the venture bubble collapsed, the number of angel investors dropped to a record low of 619 in 2011. Over the five years since, however, the number has been recovering.

 

 

Total angel investment has been increasing for the past four years, exceeding the annual investment milestone of USD 90.91 million, which was a barrier that most believed could not be breached for more than 10 years. Driving this remarkable growth is likely the increase in the number of venture-backed startups, heightened social interest in startups, and the government’s decision to increase the income tax deduction rate for angel investors.

 

In fact, the government has consistently increased the income tax deduction rate for individual angel investors over the past several years in order to boost angel investment. Starting at only 10 percent in 2006, the income tax deduction rate was increased to 20 percent in 2011 and 30 percent in 2012. Then, with the government’s announcement of its policy to promote venture-backed startups in 2013, the deduction rate for angel investors making investments of USD 45.46 thousand or less was increased to 50 percent. Since 2015, a deduction rate of 100 percent has been in place for those making less than USD 13.64 thousand in angel investment. A close examination of the recent investment trend reveals that the investment environment for venture-backed companies has improved with the steady increase in angel investment and investment by VC firms. However, some fundamental problems remain to be solved in order for a strong investment culture to take root in Korea.

 

Until now, investors have avoided making angel investments, not necessarily due to the lack of government tax benefits, such as income tax deductions, but because of the difficulties involved in earning returns from their investments, the lack of information on companies to invest in, and other fundamental problems. In fact, in a survey conducted by the Small and Medium Business Administration and Korea Business Angels Association showed that 48 percent of respondents avoid making angel investments due to the difficulties involved in earning returns.

 

 

*Exchange rate: 1,100KRW/1USD

 

 

 

 

Discover Korea’s Startup Investment Trends: Angel Investment

 

This is the second post in our 4 series of investment trends. Born2Global discusses about venture capital investment, angel investment, exit, and crowdfunding. Stay tuned for the upcoming 3 series.

 

 

Angel investment records 11-year high

 

In 2015, the amount of angel investment exceeded USD 90.91 million annually, which is the highest it has been since 2004. Moreover, angel investment has recorded positive growth for the fourth consecutive year since 2011. According to the Small and Medium Business Administration’s report on angel investment trends, the total amount of angel investment made in Korea in 2015 was USD 127.18 million, reaching a record high in the 11 years since 2004, when total angel investment dropped to USD 42.09 million from USD 42.09 million in 2003 with the collapse of the venture bubble.

 

Personal investment associations have been making a steady rise as well. In 2015, there were 89 personal investment associations, with a total investment amount of USD 40.55 million, representing increases of 61.8 percent and 9.8 percent from the 55 associations and USD 36.91 million in total investment in 2014, respectively. In the first half of 2016, the number of angel investors’ personal investment associations exceeded 100, showing a continuous increase.

 

Number of angel investors exceeds 10,000 in 15 years

 

The number of angel investors registered with the Angel Investment Support Center in the first half of 2016 was 11,314, recording an increase of 19.5 percent from the 9,468 registered in the previous year and exceeding the 10,000 milestone. By occupation, the largest proportion of angel investors were in the service industry (22 percent, 2,488 investors), followed by finance (15 percent, 1,701 investors) and manufacturing (11.4 percent, 1,289 investors).

 

This was the first time in 15 years, since the first venture boom in 2001, that the number of angel investors exceeded 10,000 (12,002 investors). After the venture bubble collapsed, the number of angel investors dropped to a record low of 619 in 2011. Over the five years since, however, the number has been recovering.

 

 

Total angel investment has been increasing for the past four years, exceeding the annual investment milestone of USD 90.91 million, which was a barrier that most believed could not be breached for more than 10 years. Driving this remarkable growth is likely the increase in the number of venture-backed startups, heightened social interest in startups, and the government’s decision to increase the income tax deduction rate for angel investors.

 

In fact, the government has consistently increased the income tax deduction rate for individual angel investors over the past several years in order to boost angel investment. Starting at only 10 percent in 2006, the income tax deduction rate was increased to 20 percent in 2011 and 30 percent in 2012. Then, with the government’s announcement of its policy to promote venture-backed startups in 2013, the deduction rate for angel investors making investments of USD 45.46 thousand or less was increased to 50 percent. Since 2015, a deduction rate of 100 percent has been in place for those making less than USD 13.64 thousand in angel investment. A close examination of the recent investment trend reveals that the investment environment for venture-backed companies has improved with the steady increase in angel investment and investment by VC firms. However, some fundamental problems remain to be solved in order for a strong investment culture to take root in Korea.

 

Until now, investors have avoided making angel investments, not necessarily due to the lack of government tax benefits, such as income tax deductions, but because of the difficulties involved in earning returns from their investments, the lack of information on companies to invest in, and other fundamental problems. In fact, in a survey conducted by the Small and Medium Business Administration and Korea Business Angels Association showed that 48 percent of respondents avoid making angel investments due to the difficulties involved in earning returns.

 

 

*Exchange rate: 1,100KRW/1USD

 

 

 

 

Discover Korea’s Startup Investment Trends: Angel Investment

 

This is the second post in our 4 series of investment trends. Born2Global discusses about venture capital investment, angel investment, exit, and crowdfunding. Stay tuned for the upcoming 3 series.

 

 

Angel investment records 11-year high

 

In 2015, the amount of angel investment exceeded USD 90.91 million annually, which is the highest it has been since 2004. Moreover, angel investment has recorded positive growth for the fourth consecutive year since 2011. According to the Small and Medium Business Administration’s report on angel investment trends, the total amount of angel investment made in Korea in 2015 was USD 127.18 million, reaching a record high in the 11 years since 2004, when total angel investment dropped to USD 42.09 million from USD 42.09 million in 2003 with the collapse of the venture bubble.

 

Personal investment associations have been making a steady rise as well. In 2015, there were 89 personal investment associations, with a total investment amount of USD 40.55 million, representing increases of 61.8 percent and 9.8 percent from the 55 associations and USD 36.91 million in total investment in 2014, respectively. In the first half of 2016, the number of angel investors’ personal investment associations exceeded 100, showing a continuous increase.

 

Number of angel investors exceeds 10,000 in 15 years

 

The number of angel investors registered with the Angel Investment Support Center in the first half of 2016 was 11,314, recording an increase of 19.5 percent from the 9,468 registered in the previous year and exceeding the 10,000 milestone. By occupation, the largest proportion of angel investors were in the service industry (22 percent, 2,488 investors), followed by finance (15 percent, 1,701 investors) and manufacturing (11.4 percent, 1,289 investors).

 

This was the first time in 15 years, since the first venture boom in 2001, that the number of angel investors exceeded 10,000 (12,002 investors). After the venture bubble collapsed, the number of angel investors dropped to a record low of 619 in 2011. Over the five years since, however, the number has been recovering.

 

 

Total angel investment has been increasing for the past four years, exceeding the annual investment milestone of USD 90.91 million, which was a barrier that most believed could not be breached for more than 10 years. Driving this remarkable growth is likely the increase in the number of venture-backed startups, heightened social interest in startups, and the government’s decision to increase the income tax deduction rate for angel investors.

 

In fact, the government has consistently increased the income tax deduction rate for individual angel investors over the past several years in order to boost angel investment. Starting at only 10 percent in 2006, the income tax deduction rate was increased to 20 percent in 2011 and 30 percent in 2012. Then, with the government’s announcement of its policy to promote venture-backed startups in 2013, the deduction rate for angel investors making investments of USD 45.46 thousand or less was increased to 50 percent. Since 2015, a deduction rate of 100 percent has been in place for those making less than USD 13.64 thousand in angel investment. A close examination of the recent investment trend reveals that the investment environment for venture-backed companies has improved with the steady increase in angel investment and investment by VC firms. However, some fundamental problems remain to be solved in order for a strong investment culture to take root in Korea.

 

Until now, investors have avoided making angel investments, not necessarily due to the lack of government tax benefits, such as income tax deductions, but because of the difficulties involved in earning returns from their investments, the lack of information on companies to invest in, and other fundamental problems. In fact, in a survey conducted by the Small and Medium Business Administration and Korea Business Angels Association showed that 48 percent of respondents avoid making angel investments due to the difficulties involved in earning returns.

 

 

*Exchange rate: 1,100KRW/1USD

 

 

 

 

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