South Korea's venture capital (VC) market is rebounding in the second quarter, driven by investments in artificial intelligence (AI) and robotics, and is expected to reach record levels this year. The influx of foreign capital, including investments from Nvidia, is further fueling this investment enthusiasm.
While global AI investment remains heavily concentrated in the United States, recent financial market risks between the U.S. and China have led to increased capital flowing into the South Korean market.
According to THE VC, a venture capital analysis platform, the total investment in domestic startups and small businesses for the second quarter was 5.63 trillion won. Excluding the 2.22 trillion won from Dunamu's acquisition of existing shares, new investments in the second quarter amounted to 3.41 trillion won. The cumulative investment for the first half of the year, excluding acquisitions, reached 5.57 trillion won, a 124.7% increase compared to the same period last year (2.48 trillion won).
The cumulative investment for the first half of the year stands at 7.80 trillion won, surpassing last year's total annual investment of 6.93 trillion won. As of now, the cumulative investment has reached 8.53 trillion won, reflecting a 145% increase from the previous year.
With a focus on big deals, the average investment amount has surged to 24.78 billion won, nearly three times the amount from last year (8.55 billion won), while the median investment has doubled to 7 billion won from last year's 3.5 billion won. The proportion of deals exceeding 10 billion won in early rounds has expanded to 71.8%, indicating a clear trend toward larger initial investments.
Investments have concentrated on AI and robotics. This year, the number of investments in AI and robotics reached 169, an 8.3% increase from last year, with the investment amount soaring to 2.68 trillion won, a 485.2% increase. AI and robotics accounted for 34.3% of total investment, rising to 51.7% in early rounds and 91.5% in seed rounds.
In addition to domestic VC funds, direct investments from foreign capital are also active. Nvidia has committed to investing $1 billion (approximately 1.46 trillion won) in Naver.
The semiconductor materials company Point2Tech raised 53.7 billion won in its Series B funding round in April. In the semiconductor and display sectors, there were 20 deals exceeding 10 billion won by the second quarter, the second highest after the bio, medical, and healthcare sectors. Among the 17 large deals exceeding 50 billion won in the second quarter, five were in this sector, representing the largest share.
Doosan Robotics is also reportedly in discussions for equity investments from U.S. funds, suggesting that direct investments in AI could reach new heights.
There are indications of capital inflow from China as well. Recently, Shandong High-Speed, a Chinese state-owned fund, decided to invest up to 1 trillion won in domestic renewable energy and AI-linked projects. Companies like Huawei and Xfusion are also reportedly continuing discussions about investments centered on AI data centers.
In this context, Shandong High-Speed Chairman Pan Yongmin stated, "Korea's financial sector has developed significantly compared to other countries in the global economy, and there are almost no risk factors. The investment in computing systems has also been active, allowing for bold investment decisions."
Analysts suggest that the backdrop for this investment boom includes financial market instability in the U.S. and China. With unpredictable financial policies under the Trump administration and escalating competition for AI dominance with China, uncertainty has increased for many companies, excluding some big tech firms.
The deterioration of corporate liquidity due to excessive capital investment by U.S. and Chinese companies has also driven investors to seek opportunities in South Korea. In fact, a Bank of America survey in July identified the "collapse of the AI bubble" as the biggest risk factor in the financial market. The International Financial Center has pointed to financial risks as a downward factor for the Chinese economy this year.
* This article has been translated by AI.
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