**Initial Startup Investment Decreases by 17% vs. 23% Increase for Later-Stage Companies, Government to Provide Early Seed Funding**
Over the past five years (2020–2024), venture investment trends have shown significant changes. Last year’s venture investment amount increased by 9.5% from the previous year, reaching approximately 11.9 trillion won. This marks a rebound after two consecutive years of decline since 2021, with a record number of 4,697 companies securing venture funding.
However, fund formation decreased by 19% year-on-year, focusing on private sectors, totaling 10.555 trillion won. Investments in early-stage companies (under three years in operation) have been declining for two consecutive years. In response, the government plans to boost various policies, including early policy-driven financial support for venture funds.
According to the Ministry of SMEs and Startups, the domestic venture investment amount in 2024 was 11.9457 trillion won, an increase of over 1 trillion won from 2023. Venture capital companies invested 23% more, reaching 6.6315 trillion won, while new technology finance companies saw a 3.7% decrease, amounting to 5.3142 trillion won.
The overall fund formation was 10.555 trillion won, a 19% decrease from 2023’s 13.0328 trillion won, due to private sector contraction. Yet, policy-driven financing saw a significant increase due to expanded contributions from the government’s mother fund and growth finance.
Conversely, private sector fund formation decreased sharply by 25% to 8.1324 trillion won. Financial institutions, excluding the Korea Development Bank, reduced by 32%, and venture capital by 12.3%.
Despite an increase in companies receiving venture investments, early startups are still facing financial challenges, while funding concentrates on later-stage companies, reflecting a polarization in the investment landscape. Investments in early-stage firms fell by 17% to 2.2243 trillion won, whereas investments in medium-term (3–7 years) and later-stage firms (beyond 7 years) increased by 9.3% and 23.3%, respectively.
By industry, ICT (Information and Communication Technology) services saw a 38% increase in investments, while the “video, performance, and music” sector decreased by 23.7%. The rising interest in AI is believed to have spurred ICT investments.
The Ministry of SMEs and Startups highlighted that the venture investment scale has increased by 47.5% compared to pre-pandemic levels in 2020, emphasizing a notable recovery in the global market. This year, the ministry plans to announce the entire 1 trillion won budget for contributions to foster early seed funding and increase fund investments in startups and regional areas.
Minister Oh Young-joo remarked that despite global challenges, Korea’s venture investment scale has continued to grow steadily, underscoring efforts to deregulate and foster a leading venture investment ecosystem by incorporating on-the-ground perspectives.