[Asia Economy Reporter Donghyun Choi] Last year, the scale of venture investment decreased by more than 10% due to the triple crisis of high interest rates, high inflation, and high exchange rates.
The Ministry of SMEs and Startups announced on the 29th that last year's venture investment amount was 6.764 trillion KRW, down 11.9% from the previous year. This is the second largest scale following the record high in 2021.
By quarter, investments were active in the first and second quarters but contracted from the third quarter onward. In the first quarter, investment was 2.2214 trillion KRW, an increase of 68.5% (902.7 billion KRW) compared to the same period in 2021. The second quarter saw a 1.4% (26.2 billion KRW) increase to 1.9315 trillion KRW. In the third quarter, it dropped to 1.2843 trillion KRW, down 38.6% (807 billion KRW) year-on-year. The fourth quarter decreased by 43.9% (1.0381 trillion KRW).
An official from the Ministry of SMEs and Startups analyzed, "While investment projects that were being reviewed before the market tightening were executed until the first half of the year, from the third quarter, high inflation and high interest rates began to significantly impact the venture investment market."
By industry, 70.5% of total investment was concentrated in three sectors: ICT (Information and Communication Technology) services, distribution & services, and bio & medical. The ICT services sector received the largest investment of 2.3518 trillion KRW (34.8%). However, this was a 3.2% (76.5 billion KRW) decrease compared to 2021.
Bio & medical investment amounted to 1.1058 trillion KRW, ranking third after ICT services and distribution & services (1.3126 trillion KRW). However, it decreased by 34.1% (571.2 billion KRW) compared to 2021 due to the decline in stock prices of listed bio companies and stricter screening for technology-special listing.
The video, performance, and music sectors saw an increase of 10.6% (44.3 billion KRW) to 460.4 billion KRW compared to 2021. This was attributed to the strong performance of entertainment and video content driven by the global popularity of K-pop and K-drama, as well as the recovery of movie attendance following the easing of social distancing measures.
Cho Juhyun, Vice Minister of the Ministry of SMEs and Startups, stated, "Despite the difficult environment of record inflation and high interest rates, the fact that venture fund formation exceeded 10 trillion KRW for the first time and investment performed relatively well compared to foreign countries is an achievement made by our venture capitals working hard on the ground." He added, "With the recent deepening decline, the most important task is to thaw the frozen investment sentiment."
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