[비즈한국] As the scale of global venture companies continues to grow, we have moved beyond the days when a valuation of $1 billion (approximately 1.5 trillion won) was considered an incredible success, known as "unicorn" companies that only existed in our imagination. Now, "hectocorn" companies are emerging. The term adds the prefix "hecto," meaning 100, to signify a corporate value 100 times that of a unicorn. ByteDance, the Chinese venture company that developed and operates TikTok, is the world's first hectocorn.
Recently, with the emergence of artificial intelligence (AI) leading to a rise in hectocorn companies, the scale of venture capital invested in them is also increasing. However, with each passing year, the share of global venture capital in South Korea's venture investment market is shrinking. This is largely due to falling behind in the AI craze, and with the Yoon Suk-yeol administration—which launched the Presidential Committee on the Age of Artificial Intelligence last year to keep pace with global trends—now facing a crisis due to emergency martial law and impeachment, there are concerns that global venture capital funds headed toward South Korea will decrease even further.
From January 10, the Ministry of SMEs and Startups held "Super-gap Startup Investor Relations (IR) Events" in Silicon Valley for three days to support the global expansion of Korean venture companies. The events were designed to introduce Korean companies to global corporations and large-scale venture investors, as well as to discuss investment cooperation to attract foreign venture capital. The government organized these events because, despite various measures implemented to attract global venture investment, the inflow of overseas funds into the country remains sluggish.
To attract foreign investment for Korean venture companies, the government introduced the "K-Startup Global Expansion Strategy" in September 2022, the "Startup Korea Comprehensive Measures" in August 2023, and the "Plan to Leap into an Advanced Venture Investment Market for Globalizing Ventures and Startups" in October 2024. However, the proportion of global venture investment out of the total domestic venture investment continues to decline.
In 2021, the total domestic venture investment was 15.9371 trillion won, of which global venture investment in Korea was 989.5 billion won, accounting for 6.2%. This share fell to 4.9% in 2022 and further dropped to 2.1% in 2023. A bigger problem is that the absolute amount of venture investment is also shrinking. Total venture investment decreased from 12.4706 trillion won in 2022 to 10.9133 trillion won in 2023. Attracting global venture investment is in a dire state. Global venture investment in Korea, which was approaching 1 trillion won in 2021, plummeted to 231.8 billion won in 2023, falling to one-quarter of its level in just two years.
Compared to major countries, the inflow of global venture investment into South Korea is insignificant. As of 2023, foreign capital accounted for 84% of total venture investment in Singapore and 74% in the UK. Even in the United States and China, which have an abundance of domestic venture capital, the share of foreign capital in venture investment was 7% and 12%, respectively, both higher than in Korea. Countries that attract significant global venture capital are all nations demonstrating strong competitiveness in AI.
Recently, Boston Consulting Group (BCG) released an "AI Maturity Matrix" report, which evaluated 73 countries worldwide based on their AI technology maturity and potential. According to the report, only five countries—the United States, China, Singapore, the UK, and Canada—were ranked at the top as "AI pioneers." Without being at the forefront of the AI field, no matter how hard a country tries, it cannot produce the types of venture companies that attract the attention of the global venture investment industry.
This is further highlighted by recent trends in the global venture market. According to the "Q1–Q3 2024 Venture Capital Investment Trends" report by the global accounting and consulting firm KPMG, AI was the leading sector for venture investment last year. Starting with Anthropic, which attracted the largest investment of $4 billion in the first quarter, Scale AI raised $1 billion in the second quarter, and the AI-related defense firm Anduril received a $1.5 billion investment in the third quarter, cementing AI as the largest field for venture capital investment. KPMG noted, "Despite market uncertainty, strong investment in AI continued in the third quarter."
An official from the economic sector pointed out, "Recently, OpenAI, the developer of ChatGPT, announced a plan to attract $175 billion (approximately 255 trillion won) of global funds waiting for AI investment into the United States," and added, "Regardless of President Yoon's impeachment or legal trials, the political circle needs to pay attention to ensure that government support policies for AI continue."