Korea Venture Investment Hits Record High on AI, Chip Boom

South Korea's venture investment market reached an all-time high of nearly 9 trillion won, or around $6.43 billion, in the first half of the year. Record funding flowed into artificial intelligence, semiconductors, and robotics, with investments increasing by 54.3% compared to the previous year. The number of companies receiving investments grew by 17% to 2,296, indicating decreasing concentration among a few companies.

A significant portion of the investment, 21%, went to ICT services, particularly AI application technologies. The ICT manufacturing sector saw a staggering 143.3% increase in investments, fueled by deep-tech startups developing AI semiconductors, memory chips, and other advanced technologies. Other sectors, including electrical, machinery, and equipment, and biotech and medical, also experienced growth, with investments rising by 90.4% and 53.6%, respectively.

However, the gaming industry faced a sharp decline, with investments dropping by 76.3% from the previous year, accounting for only about 0.5% of total venture investment. This downturn highlights a notable disparity between various industries.

Venture fund formation rose to a second-highest first-half total on record, with new funds raising 8.44 trillion won, a 33% increase from the previous year. Financial institutions contributed significantly to this growth, with contributions rising by 54.9% to 2.61 trillion won. This increase was partly due to a policy change that reduced the risk weight applied to policy-purpose venture fund investments, making them more appealing to financial institutions.

Early-stage startups also saw a strong recovery, with funding increasing by 56.4% to 1.83 trillion won. Nine out of the 16 early-stage startups that received over 10 billion won in investment were in AI or robotics, showing a growing trend of capital flowing toward technology-focused young companies. Regionally, venture investment outside the Seoul metropolitan area surged by 104.7% year-on-year to 1.06 trillion won, outpacing the 49.9% growth in the Seoul area.

Despite the strong growth outside Seoul, the majority of venture investment still occurred in the capital region. This influx of investment is translating into job creation, with employment at startups receiving investment over the past three years growing by more than 11% annually. Young workers, aged 30 or younger, accounted for 62.4% of new hires in 2025.

The government plans to further bolster the venture sector by expanding tax incentives for companies up to ten years old and making capital gains tax exemptions permanent for eligible investments.