The VC's '2024 South Korea Startup Investment Statistics'
AI Company Investment Up 41% Year-on-Year
Marketing and Gaming Sector Investment Plummets 99%
Last year, investment polarization in startups and small and medium-sized enterprises (SMEs) became clearly evident. While investments poured into the artificial intelligence (AI) sector, investments in fields such as gaming, marketing, and finance sharply declined.
According to the '2024 Korea Startup Investment Statistics' published by The VC on the 8th, the investment amount in AI startups and SMEs last year was 966.6 billion KRW, a 41% increase from the previous year (688.1 billion KRW). This was due to major venture capital (VC) funds concentrating their investments on AI companies despite the overall contraction in the investment market.
Specifically, investments in enterprise and security AI startups and SMEs amounted to 427.9 billion KRW, accounting for half of the total AI investments. This figure is nearly four times higher than the previous year. Additionally, AI technologies in bio, medical, healthcare (221.6 billion KRW), and mobility (107.2 billion KRW) also attracted significant investment.
On the other hand, most sectors outside of AI saw a sharp decline in investments. In marketing and gaming, investment amounts decreased by 99% and 98% respectively compared to the previous year, making them the most contracted sectors. Following these were finance, pet-related industries, and semiconductor & display sectors, which also experienced significant investment reductions.
Summarizing these trends, the total investment amount in startups and SMEs last year was 6.0883 trillion KRW, down 19.7% from the previous year, and the number of investment deals dropped by 27.3% to 1,336 deals. Although the decline was less severe compared to the 50.5% plunge in investment amounts in 2023, the downward trend in investment amounts has continued for three consecutive years since 2021.
In particular, due to the impact of high interest rates since 2022 and the slowdown in domestic and international economies, investors’ risk-averse tendencies became more pronounced, leading to a notable slump in early-stage investments. The number of early-round (seed to Series A) investment deals last year decreased by about 30% to 1,067 deals, and the investment amount dropped by approximately 25% to 2.1845 trillion KRW.
However, the number of Series B investment deals was 150, and Series C deals were 65, showing only a slight decrease compared to the previous year, while Series D deals increased from 9 to 12. The investment amount also rose more than fourfold from 106 billion KRW to 427.1 billion KRW.
A venture industry insider said, “Investments seem to have concentrated as AI-related startups began to show results domestically and internationally. While related investments are expected to continue this year, investments within the AI sector are likely to be made with a focus on distinguishing the wheat from the chaff.”
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