Tracxn, a leading global SaaS-based market intelligence platform, has released its Geo Annual Report: South Korea Tech 2023. The report, based on Tracxn’s extensive database, provides insights into the South Korean Tech space.
2023 has been the least funded year for South Korea in the past three years. The South Korea Tech startup ecosystem is the 5th highest-funded region in Asia after China, India, Israel, and Singapore based on the funding till date.
South Korean tech startups experienced a downward trend across all stages of funding. This sector secured a total funding of $1.9 billion in 2023 YTD, which is a 61% plummet from $4.9 billion raised in the same period in 2022. Late-stage rounds in 2023 YTD saw funding of $945M, a decline of 65% compared to $2.9 billion raised in the same period in 2022.
Early-stage investments in 2023 YTD stood at $919 million, a drop of 58% compared with $2.2 billion raised in 2022. Seed-stage funding, too, fell 69% to $39.4 million in 2023 YTD from $127 million raised in the same period in 2022.
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The number of $100M+ funding rounds fell to five in 2023 YTD, from 14 in the same period in 2022. Companies such as Musinsa, KREAM, Toss Bank, Medipixel, and Orchestra have managed to raise funds above $100 million this year.
A downward trend was also observed in the number of unicorns created and IPOs. Toss Bank and APR became the two new members of the Unicorn club in 2023, a dip from the five Unicorns created in 2022. Further, the number of IPOs fell 63% to eight in 2023, from 22 last year.
The number of acquisitions in this space fell to 22 in 2023 YTD, from 31 in the same period in 2022. Seegene Technologies, a developer of molecular diagnostic kits to detect infectious and genetic diseases, was acquired by Pfizer for a price of $43 billion. This became the highest-valued acquisition in 2023.
Retail, FinTech, and Enterprise Applications were the top funded segments in 2023. Retail companies attracted investments worth $500 million in 2023 YTD, 70% lower than $1.68 billion in the same period in 2022. The FinTech segment attracted funding of $385 million in 2023 YTD, a drop of 49% compared with $760 million raised in the same period in 2022.
Among South Korean cities, Seoul took the lead in terms of total funds raised this year followed by Gangnam and Seongnam-si. Tech startups based in Seoul secured a total funding of $934 million in 2023, followed by those based in Gangnam ($304 million) and Seongnam-si ($115 million).
Korea Investment Holdings, IMM Investment, and Aju IB Investment were the most active investors in the overall space. FuturePlay, 500 Global, and SpringCamp were the top seed-stage investors in 2023 YTD, KB Investment, Smile Gate Investment, and Korea Investment Holdings were the top Early-Stage investors in 2023 YTD. IBX Partners was the top late-stage investor in 2023 YTD
The South Korean economy does face certain challenges, including inflationary pressures, declining GDP growth, and ongoing geopolitical tension with North Korea. However, the outlook for 2024 remains positive as the Central Bank predicts the GDP growth to improve to 2.1% from the 1.4% growth rate observed in the third quarter of 2023.
