Investment in bio and medical ventures in the first half of 2023 was less than half of the same period of last year.
According to the Ministry of SMEs and Startups, investment in bio and medical ventures totaled 596.1 billion won ($448.1 million) in the first half of this year, down 54.7 percent from 1.31 trillion won in the first half of 2022. It marked an even steeper decline compared to 1.81 trillion won in the first half of 2021.
The share of the bio and medical sector in total venture investment also dropped. Bio and medical ventures topped the list of venture investments, with 28.6 percent in 2019, 24.9 percent in 2020, and 27.5 percent in 2021, but plunged to 13.4 percent in the first six months of this year.
In 2022, ICT service took the top spot in venture investment.
However, the ministry said the excessive investment in 2021 and 2022 was exceptional, and the overall trend of venture investment is regaining its natural trend.
"A detailed analysis of the performance of startup investment companies confirmed that more than 80 percent of the increase in investment from 2021 to 2022 was concentrated in some industries," the ministry said. "The total investment of 14.4 trillion) in 2021-2022, an increase of 5.9 trillion won from the average of 8.6 trillion won, of which 81 percent, or 4.8 trillion won, was invested in non-face-to-face and bio-related industries."
The ministry also explained that 83 percent of the investment setback compared to the first half of 2022, worth about 1.9 trillion won, also occurred in non-face-to-face and bio-related investments. The non-face-to-face sector also included telemedicine firms and hospital and medical platform companies like Dr. Now.
The all-industry venture investment totaled 4.4 trillion won in the first six months. It marked a sharp from the first half of 2021 and 2022, which saw an unusual surge in performance due to the expansion of liquidity, but still showed significant growth from the first half of 2019 and 2020, the ministry said, adding that venture investment is recovering its long-term trend.
In addition, the analysis of the performance of startup investment firms indicated that investment sentiment partially recovered in the second quarter compared to the first quarter, it pointed out. As a result, the investment concentration in specific industries is also expected to ease, and the total investment amount in 2023 will be slightly above the long-term trend, it added.
"High interest rates and preference for safe assets continued. We must remain cautious about declaring the direction of the venture investment market. Still, the trend is now better than at the beginning of the year," the ministry said, commenting on the venture investment market in the second half-year. “We will actively support investments in high-tech fields, including secondary batteries, artificial intelligence (AI), and robots with high growth potential."
Minister of SMEs and Startups Lee Young reaffirmed the ministry’s policy direction.
"We are making a concerted effort to resolve the funding difficulties facing ventures and startups," Lee said. “We will continue to support the formation of private venture capital funds and implement comprehensive measures to maintain the recovery momentum."