Scaleup Investing and Density Ratio
In Korea, the Scaleup Investing Ratio (capital raised by Scaleups as a percentage of GDP) is equal to 0.74% – above the European average (0.66%) and established players such as Germany (0.59%), and France (0.61%) – while the Scaleup Density Ratio (number of scaleups per 100K inhabitants) is 1.3, quite close to the European average (1.5), better than Germany (1) but lower than France (1.8). Exciting numbers for a relatively young country’s tech scaleup scene that keep accelerating: almost half (298, 46%) of South Korean scaleups have been founded in the last 5 years, while the large majority (559, 86%) is not older than 10 years.
More than one third of them (240, 37%) raised funding in the last year, about twice the amount (123) of those that raised capital in 2018. In relative terms, the performance of the South Korean ecosystem is quite astonishing: accounting for about half of their French counterparts (1176), South Korean scaleups have been able to raise nearly the same amount of funding ($18.8B). Its performance is actually closer to the German one (837 scaleups and $26B in capital raised).
Venture Capital is the King, 67% comes from abroad
With regards to the channels of funding, the dominant source in South Korea is Venture Capital, accounting for ~81% of total capital raised, with a remarkable 67% of which from abroad. 32% ($4.5B) comes from Japan, 28% ($3.8B) from US-based investors, 7% from China and 2% from the rest of the world. Domestic investors account for 27% ($3.7B) of capital, (the remaining 4% is not declared).
IPOs contribute for ~19% of the total funding: 53 scaleups from the Korean peninsula (8.2% of total) went public, having raised about $3.3B in total equity through new shares emission. The amount of “exits” through IPO is larger than any other European country, making South Korea a very fertile geography to create hefty returns for shareholders.
The stock market funding option is equally attractive for scaleups operating in different industries, with the only exception of Gaming (accounting for the 23% of total IPOs) that is by far the dominating industry among the scaleups (61, able to raise the 20.5% of total funding, equal $3.5B). Finally, talking about distribution, the dominant geographical concentration of scaleups is in the capital city of Seoul, consistently with the trend registered in many European countries (UK, France).
“Korea has always been ranked as one of the World’s most innovative economies, according to the global Innovation Index. This is why it is important to examine the current status of innovation and also explore new ways to support entrepreneurs – ended Dong Ki Lee, Executive Managing Director, Innovation & Growth Department, KITA – I believe that this report will provide global readers with useful insights, but also further their interest in connecting with the Korean innovation ecosystem”.