20210128_WEF

President Moon Jae-in on Jan. 27 delivers a special address to the World Economic Forum 2021 via videoconferencing from Cheong Wa Dae. (Yonhap News)


By Xu Aiying and Yoon Sojung

President Moon Jae-in on Jan. 27 called Korea a "safe and stable partner and investment destination."


In a special address to the Davos Agenda 2021 of the World Economic Forum via videoconferencing, President Moon said that despite the pandemic, Korea has never resorted to a lockdown or border closure.


"I hope that the Korean New Deal will lay ground for global companies and venture start-ups to take on new challenges and become a catalyst for expanding cooperation in future industries," he said.

"Korea will host the second P4G (Partnering for Green Growth and the Global Goals 2030) Summit in May, through which we seek to spearhead international cooperation in overcoming the climate crisis."


"As COVID-19 becomes more prolonged, inequality is widening — a gap that we are witnessing both within countries, and between countries,” he said. "Equally as important as responding to the immediate COVID-19 outbreak and the economic crisis, is our commitment to pool our wisdom to fight against polarization and inequality in the post-COVID-19 era."


On Korea's COVID-19 situation, the president said, "Korea has entered the stage of overcoming this pandemic, and has set a goal for inclusive recovery and resurgence."


"As with all other countries, we will begin by carrying out vaccinations which will be the first step we take towards herd immunity," he added.

"Korea has entered into contracts with many pharmaceutical companies to secure a supply of various types of vaccines that will sufficiently cover our entire population. We have decided on free vaccinations for the country to uphold the cause of an inclusive recovery in our everyday lives."


The chief executive's speech was streamed via videoconferencing with other influential global figures attending the forum in Switzerland, which hosts the event every year.

xuaiy@korea.kr

 

 

Morethan CEO Choi Ian on Nov. 28 at his Seoul office says his company’s growth is based on its innovation philosophy of creating positive social effects for society.

Morethan CEO Choi Ian on Nov. 28 at his Seoul office says his company’s growth is based on its innovation philosophy of creating positive effects for society.



By Jung Joo-ri and Yoon Sojung
Photos = Choi Taesoon 
Seoul | Nov. 28, 2018

Korea.net from 2019 will feature companies leading innovative growth in various sectors of the Korean economy. The first part of this series is about Morethan, a company achieving the Korean government’s economic vision of "people-centered growth.



In 2012, Choi Ian, a student at the University of Leeds in the U.K., loved his car so much but later had to scrap it because of a hit-and-run accident. 

Deeply saddened, he took the driver’s seat from the car back to his place. His friends asked him why he had brought the seat home, saying it did not fit in his pad. Yet one friend said, "It has good leather, though, you could make a bag with that."

The idea gave Choi a eureka moment. His senior thesis was titled "The Sustainable and Social Responsibility of Korean Carmakers" and he eventually began a new business, Morethan, which manufactures bags from genuine leather, air bags and seat belts from scrapped cars.

Choi, 37, founded Morethan in 2015 and launched his brand Continew in 2017 after two years of R&D. 

The company started out with three workers but saw growth to 16 full-time staff a year later. It exports about 180 items to 15 countries including the U.S., Germany, France, Spain and Japan with an estimated monthly turnover of USD 180,000.

This graphic image shows how Morethan collects and upcycles car seat leather. The upcycling process comprises six stages: cutting, cleaning, drying, ironing, categorizing and waxing. (Morethan)

This graphic image shows how Morethan collects and upcycles car seat leather. The upcycling process comprises six stages: cutting, cleaning, drying, ironing, categorizing and waxing. (Morethan)




Upcycling and innovating products

Upcycling is the first keyword used to explain Morethan.

Choi said whereas recycling means collecting used resources or materials to reuse them for their original purposes, upcycling means using such materials to transform them into new materials and create new uses for them. He stressed that car seats, air bags and seat belts are categorized as safety products and thus not recycled for that reason.

Under a contract with Hyundai Motor Company, Morethan collects approximately five tons of car seats, air bags and seat belts every week that undergo a six-step procedure before being used to make premium leather bags. 

"The quality leather used in car seats doesn't get dirty easily but the procedure involves washing and drying as the leather can have an unpleasant smell," Choi said.

Pursuing win-win cooperation by hiring underprivileged

The other keyword for Morethan is social responsibility shown through its progressive hiring practices. 

The company has hired as bag designers women who had to stop careers of 10 years or longer due to giving birth and child care. A flexible workhour system allows them to handle both their jobs and childcare and also work at home instead of commuting to the office. 

"Isn’t it nice to be able to go to the office after sending your kids to school?" Choi said. "Staying at the office for eight hours doesn't guarantee coming up with a good design idea. Companies in the U.K. make employees work at home once a week to save energy."

Morethan also actively hires North Korean defectors. By doing so, the company hopes to help them better adapt to life in South Korea through more chances to meet people face to face. 

"A high proportion of (defectors) tend to be isolated from South Korean society, but once they have more chances to meet people at the office, they’ll gain confidence," Choi said, adding that he hopes to offer various job opportunities to them.

Choi compares the leather used in the car seats of the SUV Hyundai Santa Fe with bags and shoes made with the upcycled leather from the vehicle. Because of the vast array of seats and leather types used in cars, Morethan produces a variety of products using them.

Choi compares the leather used in the car seats of the SUV Hyundai Santa Fe with bags and shoes made with the upcycled leather from the vehicle. Because of the vast array of seats and leather types used in cars, Morethan produces a variety of products using them.



Morethan has wooed customers with a social value-based concept by transforming scrapped material into new, high value-added products. Many people saw photos of K-pop artists RM of BTS and Wendy from Red Velvet wearing Continew bags on their Instagram accounts and customers promoted this Morethan brand on their social network accounts, earning the company free advertising.

Morethan now exports its products to 15 countries and has even set up a branch in the U.S. 

On his company’s goals, Choi emphasized the need to build a new ecosystem in the economy.

"We hope to supply leather to every bag company in the world interested in upcycling leather. If we do this, everyone can use upcycling products," he said.

"The final business model for pursuing our goal is creation of a new ecosystem in the economy based on upcycling so that more people can use upcycled products easily." 

Through its vision of innovative growth, the government seeks to build a people-centered economy by fundamentally changing the country’s social and economic structures.

Choi said Morethan’s process of producing socially beneficial products should serve as a model for what direction Korea should take to lead innovative growth.

"A great company should offer benefits through products rather than just show fancy designs to customers," he said, underscoring his company’s philosophy toward social innovation. 

etoilejr@korea.kr

 

 

 


President Moon Jae-in on Jan. 10 answers questions from both Korean and foreign journalists during his New Year’s news conference at the Yeongbingwan Guest House of Cheong Wa Dae. (Cheong Wa Dae)

President Moon Jae-in on Jan. 10 answers questions from both Korean and foreign journalists during his New Year’s news conference at the Yeongbingwan Guest House of Cheong Wa Dae. (Cheong Wa Dae)



By Jung Joo-ri and Yoon Sojung 

President Moon Jae-in on Jan. 10 announced the policy direction of his administration on employment, labor issues and regulatory innovation in a Q&A session that was part of his New Year’s news conference at Cheong Wa Dae. 

Reflecting on his first 20 months in office, the chief executive said the lackluster employment index was the biggest regret of his term, saying, "How to solve the issue is the most pressing task of my administration." 

He said the chronically poor performance of manufacturing resulted in the sluggish employment market. 

Proposing innovation as the key to solving the issue, he said, "Innovation in the manufacturing sector such as applying smart technologies will heighten the industry’s competitiveness." 

President Moon added that the government will strive to support venture startups and entrepreneurs to produce new growth momentum. 

On labor policy, he said, "Improving the lives of employees is crucial for reducing and removing economic inequality."

"My administration has put a lot of effort toward raising employee wages, shortening work hours and transforming irregular workers into regular ones."

Switching to regulatory innovation, President Moon urged all sides to have an open heart. 

"In the era of the Fourth Industrial Revolution, many changes are taking place in the economy and society but it seems some people are sticking to outdated values," he said.

"I hope all of us can have a more open heart to meet the changes of the times and show a more flexible mindset to have conversations with others."

President Moon also announced more government support to foster startups, suggesting that junior and senior workers work together to take advantage of new ideas from younger staff and the experience of veteran employees simultaneously. 

etoilejr@korea.kr





Discover Korea’s Startup Investment Trends: Venture Capital Investment

 

This is the first post in our 4 series of investment trends. Born2Global discusses about venture capital investment, angel investment, Exit, and crowdfunding. Stay tuned over the coming month as we present following 3 series.

 

New venture capital investment reaches record high

 

According to the Korea Venture Capital Association (KVCA), new venture capital (VC) investments made by Korean VC firms reached USD 2.6 billion in 2015, exceeding the previous record of USD 2.01 billion in 2000. This new record represents a 27.2 percent increase from the level of investment (USD 1.49 billion) made in 2014.

 

This trend continued into 2016. The KVCA reported that, as of November 2016, new VC investment in Korea had reached USD 1.68 billion, up 0.9 percent from the level of investment (USD 1.67 billion) recorded in the same period the previous year. This is an even larger increase than the record increase from the previous year. The number of companies receiving investment has grown significantly as well. By the end of November 2016, the number of new venture-backed companies was 1,057, up 13.0 percent from the 935 companies recorded in the same period the previous year.

 

Rapid Increase in Investment in the Bioindustry

 


 

While the ICT services and distribution sectors led new VC investment in 2015, the bioindustry took a significant lead in 2016, seemingly due to a bandwagon effect.

 

According to the KVCA, a total of USD 361.18 million was invested in the bioindustry and medical sectors by the end of November 2016, exceeding the annual investment of USD 288.18 million recorded in the previous year. Investment in the bioindustry sector has increased fourfold since 2012, with the bioindustry’s proportion of total investment having grown significantly as well. In 2012, investment in the bioindustry accounted for only 8.5 percent of total new VC investment. However, it rose continuously every year, reaching 10.5 percent in 2013, 17.8 percent in 2014, and 15.2 percent in 2015, hitting a record high of 21.4 percent in 2016 and rising above the 20 percent range for the first time. By 2016, two out of every 10 investments being made were in the bioindustry or medical sector.

 

Although investment in the electrical manufacturing, machinery, and equipment industries rose by a small margin, and the chemical and materials industries saw a steady flow of investment, the growth of investment in these industries was not nearly enough to have an effect on the general trend. New investment in the electrical manufacturing, machinery, and equipment industries rose from USD 141.82 million in 2014 to USD 147.27 million in 2015. As of November 2016, it had reached USD 177.64 million, showing an increase of over 20 percent from the previous year.

 

Slight decline in investment in ICT services

Sharp drop in investment in the distribution and game industries

 

VC investment in the IT services industry showed remarkable growth in 2015, but remained sluggish throughout 2016. Also, investment in the distribution industry, which had risen sharply in recent years, also slowed down, while investment in the game industry has been falling for the past two years.

 

According to the KVCA, new investment in the game industry in 2016 reached USD 117.82 million by the end of November 2016, falling far below the USD 153 million recorded in 2015. This means that new investment in this industry has declined consistently over the past two years since 2014. Investment in the distribution industry, which had soared over the past three years, also retracted, recording USD 193.97 million in 2016 (as of the end of November), down from USD 276.64 million in 2015, which was nearly a 50 percent increase compared to the previous year (USD 186 million in 2014).

 

Investment in the ICT services industry, which had grown steadily over the previous five years, also shrank in 2016, recording USD 317.64 million as of November, which is below the USD 365.36 million seen in 2015. Although new investment in December still needs to be included in the total for the aggregate annual record, if the current trend continues, the total amount of new investment in the ICT services industry in 2016 is expected to fall below that of 2015.

 

Significant increase in the proportion of investment in early-stage companies 

 

 

The proportion of investment in early-stage companies that have been active for less than three years has been increasing gradually since 2009. Accounting for 28.5 percent of total VC investment in 2009, investment in such companies rose to 29.2 percent in 2010, 29.9 percent in 2012, 30.7 percent in 2014, and 31.3 percent in 2015. In 2016, the proportion of investment grew to 36.7 percent, exceeding investment in late-stage companies for the first time since 2009.

 

Investment in early-stage, venture-backed companies under three years old had accounted for more than 60 percent of total VC investment in the early 2000s, but then declined sharply to the upper-20 percent range, and remained there until 2010. Since the onset of the mobile era in the 2010s, the amount and proportion of investment in such companies have been growing simultaneously. The reason for this is that initial expenses for startups have decreased, while the number of support programs for them has increased, which in turn has led to a surge in the number of venture-backed companies. As a result, more such early-stage companies are receiving initial investments.

 

The proportion of investment in late-stage startups has been declining for the past three years. After jumping from 44.1 percent in 2010 to 49.7 percent in 2013, the proportion of investment in late-stage startups (more than seven years old) fell to 44.4 percent in 2014 and 41.2 percent in 2015, before dropping rapidly to 5.5 percent in 2016.

The proportion of investment in mid-stage startups (between three and seven years old), which are at a point in their development where they are said to be entering the so-called “Valley of Death,” has remained in the mid-20 percent range of total investment. Recording USD 264 million in mid-2010, investment in mid-stage startups accounted for 26.6 percent of total investment (USD 1.74 billion) in startups. This figure, however, fell to 26.1 percent in 2011 and 24.8 percent in 2014. It then jumped to 27.4 percent in 2015 and reached 27.8 percent as of November 2016, showing a trend similar to that of the previous year.

 

This surge in the proportion of investment in early-stage startups, while the proportion of that in mid-stage startups remains steady, indicates that there is growing interest in new startups and an increasing lack of funding for growing and maturing companies. However, this could also mean that the relative number of mid-stage companies worth investing in has decreased.

 

Upward trend in the number of investment sources 

 


 

As of the end of November 2016, investment resources for venture-backed companies, including the number of VC funds and the amount of funds invested, have gradually increased, signifying an increase in the capacity for investment in startups and other venture-backed companies.

 

According to the KVCA, the total number of VC funds in Korea stands at 598, as of the end of November 2016, representing an 11.2 percent increase from the 538 funds recorded at the end of 2015. In the last five years, the number of VC funds has gradually increased, and the sizes of their investments have grown as well. The total amount of VC investments recorded USD 14.77 billion as of the end of November 2016, up 13.3 percent from USD 13.04 billion in 2015 and nearly double the amount (USD 8.42 billion) in 2012.

 

This consistent increase in the total number of VC funds means that investment sources, and investment opportunities, have been expanding, and also that efforts to find new investment opportunities are intensifying. There are some VC funds that invest in a broad range of companies, but most have been created to focus their investments on specific areas.

 

*Exchange rate: 1,100KRW/1USD 

 

 

 

 

Discover Korea’s Startup Investment Trends: Venture Capital Investment

 

This is the first post in our 4 series of investment trends. Born2Global discusses about venture capital investment, angel investment, Exit, and crowdfunding. Stay tuned over the coming month as we present following 3 series.

 

New venture capital investment reaches record high

 

According to the Korea Venture Capital Association (KVCA), new venture capital (VC) investments made by Korean VC firms reached USD 2.6 billion in 2015, exceeding the previous record of USD 2.01 billion in 2000. This new record represents a 27.2 percent increase from the level of investment (USD 1.49 billion) made in 2014.

 

This trend continued into 2016. The KVCA reported that, as of November 2016, new VC investment in Korea had reached USD 1.68 billion, up 0.9 percent from the level of investment (USD 1.67 billion) recorded in the same period the previous year. This is an even larger increase than the record increase from the previous year. The number of companies receiving investment has grown significantly as well. By the end of November 2016, the number of new venture-backed companies was 1,057, up 13.0 percent from the 935 companies recorded in the same period the previous year.

 

Rapid Increase in Investment in the Bioindustry

 


 

While the ICT services and distribution sectors led new VC investment in 2015, the bioindustry took a significant lead in 2016, seemingly due to a bandwagon effect.

 

According to the KVCA, a total of USD 361.18 million was invested in the bioindustry and medical sectors by the end of November 2016, exceeding the annual investment of USD 288.18 million recorded in the previous year. Investment in the bioindustry sector has increased fourfold since 2012, with the bioindustry’s proportion of total investment having grown significantly as well. In 2012, investment in the bioindustry accounted for only 8.5 percent of total new VC investment. However, it rose continuously every year, reaching 10.5 percent in 2013, 17.8 percent in 2014, and 15.2 percent in 2015, hitting a record high of 21.4 percent in 2016 and rising above the 20 percent range for the first time. By 2016, two out of every 10 investments being made were in the bioindustry or medical sector.

 

Although investment in the electrical manufacturing, machinery, and equipment industries rose by a small margin, and the chemical and materials industries saw a steady flow of investment, the growth of investment in these industries was not nearly enough to have an effect on the general trend. New investment in the electrical manufacturing, machinery, and equipment industries rose from USD 141.82 million in 2014 to USD 147.27 million in 2015. As of November 2016, it had reached USD 177.64 million, showing an increase of over 20 percent from the previous year.

 

Slight decline in investment in ICT services

Sharp drop in investment in the distribution and game industries

 

VC investment in the IT services industry showed remarkable growth in 2015, but remained sluggish throughout 2016. Also, investment in the distribution industry, which had risen sharply in recent years, also slowed down, while investment in the game industry has been falling for the past two years.

 

According to the KVCA, new investment in the game industry in 2016 reached USD 117.82 million by the end of November 2016, falling far below the USD 153 million recorded in 2015. This means that new investment in this industry has declined consistently over the past two years since 2014. Investment in the distribution industry, which had soared over the past three years, also retracted, recording USD 193.97 million in 2016 (as of the end of November), down from USD 276.64 million in 2015, which was nearly a 50 percent increase compared to the previous year (USD 186 million in 2014).

 

Investment in the ICT services industry, which had grown steadily over the previous five years, also shrank in 2016, recording USD 317.64 million as of November, which is below the USD 365.36 million seen in 2015. Although new investment in December still needs to be included in the total for the aggregate annual record, if the current trend continues, the total amount of new investment in the ICT services industry in 2016 is expected to fall below that of 2015.

 

Significant increase in the proportion of investment in early-stage companies 

 

 

The proportion of investment in early-stage companies that have been active for less than three years has been increasing gradually since 2009. Accounting for 28.5 percent of total VC investment in 2009, investment in such companies rose to 29.2 percent in 2010, 29.9 percent in 2012, 30.7 percent in 2014, and 31.3 percent in 2015. In 2016, the proportion of investment grew to 36.7 percent, exceeding investment in late-stage companies for the first time since 2009.

 

Investment in early-stage, venture-backed companies under three years old had accounted for more than 60 percent of total VC investment in the early 2000s, but then declined sharply to the upper-20 percent range, and remained there until 2010. Since the onset of the mobile era in the 2010s, the amount and proportion of investment in such companies have been growing simultaneously. The reason for this is that initial expenses for startups have decreased, while the number of support programs for them has increased, which in turn has led to a surge in the number of venture-backed companies. As a result, more such early-stage companies are receiving initial investments.

 

The proportion of investment in late-stage startups has been declining for the past three years. After jumping from 44.1 percent in 2010 to 49.7 percent in 2013, the proportion of investment in late-stage startups (more than seven years old) fell to 44.4 percent in 2014 and 41.2 percent in 2015, before dropping rapidly to 5.5 percent in 2016.

The proportion of investment in mid-stage startups (between three and seven years old), which are at a point in their development where they are said to be entering the so-called “Valley of Death,” has remained in the mid-20 percent range of total investment. Recording USD 264 million in mid-2010, investment in mid-stage startups accounted for 26.6 percent of total investment (USD 1.74 billion) in startups. This figure, however, fell to 26.1 percent in 2011 and 24.8 percent in 2014. It then jumped to 27.4 percent in 2015 and reached 27.8 percent as of November 2016, showing a trend similar to that of the previous year.

 

This surge in the proportion of investment in early-stage startups, while the proportion of that in mid-stage startups remains steady, indicates that there is growing interest in new startups and an increasing lack of funding for growing and maturing companies. However, this could also mean that the relative number of mid-stage companies worth investing in has decreased.

 

Upward trend in the number of investment sources 

 


 

As of the end of November 2016, investment resources for venture-backed companies, including the number of VC funds and the amount of funds invested, have gradually increased, signifying an increase in the capacity for investment in startups and other venture-backed companies.

 

According to the KVCA, the total number of VC funds in Korea stands at 598, as of the end of November 2016, representing an 11.2 percent increase from the 538 funds recorded at the end of 2015. In the last five years, the number of VC funds has gradually increased, and the sizes of their investments have grown as well. The total amount of VC investments recorded USD 14.77 billion as of the end of November 2016, up 13.3 percent from USD 13.04 billion in 2015 and nearly double the amount (USD 8.42 billion) in 2012.

 

This consistent increase in the total number of VC funds means that investment sources, and investment opportunities, have been expanding, and also that efforts to find new investment opportunities are intensifying. There are some VC funds that invest in a broad range of companies, but most have been created to focus their investments on specific areas.

 

*Exchange rate: 1,100KRW/1USD 

 

 

 

 

Discover Korea’s Startup Investment Trends: Venture Capital Investment

 

This is the first post in our 4 series of investment trends. Born2Global discusses about venture capital investment, angel investment, Exit, and crowdfunding. Stay tuned over the coming month as we present following 3 series.

 

New venture capital investment reaches record high

 

According to the Korea Venture Capital Association (KVCA), new venture capital (VC) investments made by Korean VC firms reached USD 2.6 billion in 2015, exceeding the previous record of USD 2.01 billion in 2000. This new record represents a 27.2 percent increase from the level of investment (USD 1.49 billion) made in 2014.

 

This trend continued into 2016. The KVCA reported that, as of November 2016, new VC investment in Korea had reached USD 1.68 billion, up 0.9 percent from the level of investment (USD 1.67 billion) recorded in the same period the previous year. This is an even larger increase than the record increase from the previous year. The number of companies receiving investment has grown significantly as well. By the end of November 2016, the number of new venture-backed companies was 1,057, up 13.0 percent from the 935 companies recorded in the same period the previous year.

 

Rapid Increase in Investment in the Bioindustry

 


 

While the ICT services and distribution sectors led new VC investment in 2015, the bioindustry took a significant lead in 2016, seemingly due to a bandwagon effect.

 

According to the KVCA, a total of USD 361.18 million was invested in the bioindustry and medical sectors by the end of November 2016, exceeding the annual investment of USD 288.18 million recorded in the previous year. Investment in the bioindustry sector has increased fourfold since 2012, with the bioindustry’s proportion of total investment having grown significantly as well. In 2012, investment in the bioindustry accounted for only 8.5 percent of total new VC investment. However, it rose continuously every year, reaching 10.5 percent in 2013, 17.8 percent in 2014, and 15.2 percent in 2015, hitting a record high of 21.4 percent in 2016 and rising above the 20 percent range for the first time. By 2016, two out of every 10 investments being made were in the bioindustry or medical sector.

 

Although investment in the electrical manufacturing, machinery, and equipment industries rose by a small margin, and the chemical and materials industries saw a steady flow of investment, the growth of investment in these industries was not nearly enough to have an effect on the general trend. New investment in the electrical manufacturing, machinery, and equipment industries rose from USD 141.82 million in 2014 to USD 147.27 million in 2015. As of November 2016, it had reached USD 177.64 million, showing an increase of over 20 percent from the previous year.

 

Slight decline in investment in ICT services

Sharp drop in investment in the distribution and game industries

 

VC investment in the IT services industry showed remarkable growth in 2015, but remained sluggish throughout 2016. Also, investment in the distribution industry, which had risen sharply in recent years, also slowed down, while investment in the game industry has been falling for the past two years.

 

According to the KVCA, new investment in the game industry in 2016 reached USD 117.82 million by the end of November 2016, falling far below the USD 153 million recorded in 2015. This means that new investment in this industry has declined consistently over the past two years since 2014. Investment in the distribution industry, which had soared over the past three years, also retracted, recording USD 193.97 million in 2016 (as of the end of November), down from USD 276.64 million in 2015, which was nearly a 50 percent increase compared to the previous year (USD 186 million in 2014).

 

Investment in the ICT services industry, which had grown steadily over the previous five years, also shrank in 2016, recording USD 317.64 million as of November, which is below the USD 365.36 million seen in 2015. Although new investment in December still needs to be included in the total for the aggregate annual record, if the current trend continues, the total amount of new investment in the ICT services industry in 2016 is expected to fall below that of 2015.

 

Significant increase in the proportion of investment in early-stage companies 

 

 

The proportion of investment in early-stage companies that have been active for less than three years has been increasing gradually since 2009. Accounting for 28.5 percent of total VC investment in 2009, investment in such companies rose to 29.2 percent in 2010, 29.9 percent in 2012, 30.7 percent in 2014, and 31.3 percent in 2015. In 2016, the proportion of investment grew to 36.7 percent, exceeding investment in late-stage companies for the first time since 2009.

 

Investment in early-stage, venture-backed companies under three years old had accounted for more than 60 percent of total VC investment in the early 2000s, but then declined sharply to the upper-20 percent range, and remained there until 2010. Since the onset of the mobile era in the 2010s, the amount and proportion of investment in such companies have been growing simultaneously. The reason for this is that initial expenses for startups have decreased, while the number of support programs for them has increased, which in turn has led to a surge in the number of venture-backed companies. As a result, more such early-stage companies are receiving initial investments.

 

The proportion of investment in late-stage startups has been declining for the past three years. After jumping from 44.1 percent in 2010 to 49.7 percent in 2013, the proportion of investment in late-stage startups (more than seven years old) fell to 44.4 percent in 2014 and 41.2 percent in 2015, before dropping rapidly to 5.5 percent in 2016.

The proportion of investment in mid-stage startups (between three and seven years old), which are at a point in their development where they are said to be entering the so-called “Valley of Death,” has remained in the mid-20 percent range of total investment. Recording USD 264 million in mid-2010, investment in mid-stage startups accounted for 26.6 percent of total investment (USD 1.74 billion) in startups. This figure, however, fell to 26.1 percent in 2011 and 24.8 percent in 2014. It then jumped to 27.4 percent in 2015 and reached 27.8 percent as of November 2016, showing a trend similar to that of the previous year.

 

This surge in the proportion of investment in early-stage startups, while the proportion of that in mid-stage startups remains steady, indicates that there is growing interest in new startups and an increasing lack of funding for growing and maturing companies. However, this could also mean that the relative number of mid-stage companies worth investing in has decreased.

 

Upward trend in the number of investment sources 

 


 

As of the end of November 2016, investment resources for venture-backed companies, including the number of VC funds and the amount of funds invested, have gradually increased, signifying an increase in the capacity for investment in startups and other venture-backed companies.

 

According to the KVCA, the total number of VC funds in Korea stands at 598, as of the end of November 2016, representing an 11.2 percent increase from the 538 funds recorded at the end of 2015. In the last five years, the number of VC funds has gradually increased, and the sizes of their investments have grown as well. The total amount of VC investments recorded USD 14.77 billion as of the end of November 2016, up 13.3 percent from USD 13.04 billion in 2015 and nearly double the amount (USD 8.42 billion) in 2012.

 

This consistent increase in the total number of VC funds means that investment sources, and investment opportunities, have been expanding, and also that efforts to find new investment opportunities are intensifying. There are some VC funds that invest in a broad range of companies, but most have been created to focus their investments on specific areas.

 

*Exchange rate: 1,100KRW/1USD 

 

 

 

 

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