Overseas Investment of 440.1 Billion KRW in Q1-Q3, Up 29.4% Year-on-Year
'Land of Opportunity' USA Booming with Venture Capital Inflow and Startup Boom
Korean Market Slumps... Overseas Expansion Expected to Continue Increasing for Now
As the domestic startup market stagnates, venture capitalists (VCs) are turning their attention to 'overseas investments.' With no clear improvement in the industry conditions, they are seeking new growth engines abroad.
According to the Small and Medium Business Startup Investment Company Electronic Disclosure (DIVA) on the 27th, the total amount of new investments in other and overseas regions from the 1st to 3rd quarters was 440.1 billion KRW. During the same period last year, it was 339.9 billion KRW, marking a 29.4% increase year-on-year. This is a remarkable growth rate even considering the base effect from last year's market contraction, which was severe enough to be called a 'harsh winter.' The proportion of total investment also rose to 9.51%, up from 9.14% last year. Conversely, this implies a decrease in the domestic share.
Both Startups and VCs Head to the 'Land of Opportunity,' the United States
Although DIVA statistics do not specifically classify overseas regions, the market reports a significant increase in investments in the United States. It is common to invest through local subsidiaries. A representative example is Solastar Ventures, the U.S. subsidiary of AJU IB Investment, which has invested in 41 companies mainly in bio and information and communication technology (ICT) sectors such as Aselex, successfully listing 19 of them on NASDAQ. As the stock prices of these listed companies rose, AJU IB Investment was able to defend its third-quarter performance despite a sluggish domestic portfolio.
AJU IB Investment also holds shares in SpaceX, the space exploration company led by CEO Elon Musk. Mirae Asset Venture Investment is another VC that has participated in SpaceX investments. SpaceX has attracted attention as Musk emerged as a key ally of then-President-elect Donald Trump. The revelation of these investments caused the stock prices of the listed companies Mirae Asset Venture Investment and AJU IB Investment to surge. Meanwhile, the fact that there are over 1,000 'K-Startups' (startups with Korean-named or Korean-origin CEOs) in the U.S. is also cited as a reason for VCs' expansion into the American market. Moloco and Sendbird, located in Silicon Valley, are representative examples. Both companies have Korean CEOs and are 'unicorns' (privately held companies valued at over 1 trillion KRW).
In terms of investment scale, Korea Investment Partners (62.1 billion KRW) made the largest amount of new overseas investments. Mirae Asset Venture Investment (44.5 billion KRW), Woori Venture Partners (39.5 billion KRW), InterVest (32.4 billion KRW), and Smilegate Investment (28.9 billion KRW) followed. All of these firms manage assets under management (AUM) in the trillion-KRW range. Next, Hashed Ventures newly invested 25.6 billion KRW overseas. As a VC specializing in virtual assets, Hashed Ventures takes a different approach from the 'top 5' by reducing risk through portfolio adjustments both domestically and internationally, with over 80% of its investments overseas. Representative investment targets include blockchain gaming company Mythical Games and the largest U.S. private stock investment platform, Republic.
'Abundant Venture Capital' in the U.S., a Foothold in Japan, Regional Bases in India and Indonesia
The reason U.S. investments stand out is because the market is booming. According to the Korea International Trade Association, the U.S. has 716 unicorns, ranking first in the world and overwhelmingly surpassing China (260), which is second. Compared to 2019, before the pandemic, startup creation has increased by about 40% in four years. Thanks to this, unlike Korea where the proportion of self-employed is decreasing, the self-employment rate is on the rise in the U.S. Domestic VCs are actively expanding not only into the U.S. but also into Japan, India, and Indonesia. Japan is considered a foothold for global expansion, while India and Indonesia are gaining attention as regional hubs.
On the other hand, the domestic startup market remains sluggish, with no new unicorns emerging and the initial public offering (IPO) market shrinking. VC overseas expansion is expected to continue increasing for the time being. No Young-chul, Head of Management at AJU IB Investment, said, "We aim to complete the incorporation of Solastar Ventures' Silicon Valley branch within this year," adding, "We plan to continuously expand overseas investments to maintain growth momentum."
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