Venture capital bets on bio, IT

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Venture capital bets on bio, IT


Investment from Korean venture capital funds is exploding, and IT and bio companies are the boom’s biggest beneficiaries.

Enzychem Lifesciences managed to get listed on the Kosdaq in February this year, nearly two decades after the company was established.

The pharmaceutical company’s breakthrough came in 2011 when it received a 3 billion won ($2.78 million) venture capital investment which it used to construct a production plant in Jecheon, North Chungcheong. The company is now valued at more than 700 billion won in market capitalization, and had sales of 36.8 billion won last year.

A growing number of Korean small-and mid-sized enterprises (SMEs) like Enzychem Lifesciences are benefitting from venture capital funding, according to the latest data from the Ministry of SMEs and Startups.

The ministry announced on Monday that the amount of new investment into small and mid-sized companies for the first quarter of this year was a record 634.8 billion won, up 56.6 percent compared to the first quarter of 2017.

The Ministry of SMEs and Startups was started last July by the Moon Jae-in administration in an attempt to better support Korean small businesses. It replaced the previous Small and Medium Business Administration.

The ministry said that 26 venture capital funds started in the first quarter of the year had a total value of 993.4 billion won. This is a 46.7 percent increase compared to last year, when only 677.2 billion won worth of new venture capital funds were created.

In Korea, venture capital funds refer to funds created to support startups and SMEs that are registered with the ministry. Such investors must allocate 40 percent of their funds to start-ups and SMEs.

“The government last year injected 800 billion won in seed money for new funds, the biggest amount in history, and we think this was used as seed capital for venture capital funds created from the private sector,” explained Lee Sang-chang, an official at the investment management division of the ministry.

Korea’s venture capital funds broke the 10-trillion-won threshold in 2013. By 2017, the total value of local funds more than doubled to 20.2 trillion won. Information and communications technology (ICT) and bio companies proved especially popular.

From January to March this year, ICT companies received 218.9 billion won in investment, double of the amount they got last year. Nearly 150 billion won was invested into the bio sector, nearly triple the investment made in the industry last year.

The recent rise of venture capital funding in Korea is enabling smaller companies to move into the local stock market. Cafe24, a Korean e-commerce platform provider that received financing from venture capital firms and funds three times, was listed on the Kosdaq in February of this year. Out of the 13 companies that debuted on the secondary Kosdaq, seven have received venture capital funding.

“The amount of new investment [made by venture capital firms or funds] for this year is likely to exceed the amount from last year and hit a new historic high,” said Lee Jae-hong, the director general of venture innovation policy at the ministry.

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