Venture capitals boost overseas investment in first half

Overseas investments by South Korea’s venture capitals (VCs) have shown growth in the first half of this year despite the coronavirus pandemic, helped by follow-on investment. 

According to recent data released by the Korean Venture Capital Association (KVCA), the overseas investment made by VCs in the first six months of this year amounted to 204.7 billion won ($172 million), up 56% from 130.9 billion won a year earlier. They invested 104.9 billion won and 99.8 billion won abroad in the first and second quarters respectively.

But as the data does not include investment that new technology financial companies, new technology investment associations and start-up investment companies make through private equity funds, it can’t show the whole picture of Korean VCs’ overseas investment. 

During the first half of this year, KB Investment was ranked first in terms of the amount of overseas investment, investing 64.3 billion won in six foreign companies. When the amount not compiled by KVCA is included, the actual amount exceeds 70 billion won. KB Investment invested in India’s Vedantu (10.4 billion won), Switzerland’s Arvelle (4 billion won), and America’s Sun Surgery  Center (28.3 billion won), etc. 

SoftBank Ventures was ranked second with 46.2 billion won of investment, followed by Korea Investment Partners (35.6 billion won), Mirae Asset Venture Investment (9.1 billion won), Intervest (7.1 billion won) and IMM Investment (7 billion won).

Though the spread of the pandemic this year was expected to have a significant impact on Korea’s venture investment industry, most of the top-tier VCs saw their overseas investment increase year-on-year. This was because they continued to make subsequent investments after an initial round of investment in foreign companies. 

The expansion of each investment size contributed to the increase in overseas investment. “The average amount of each investment made by domestic VCs is increasing,” a VC source said. 

But the outlook for the second half of the year may not be that bright, as VCs have to continue to decide on new investments only through video conferencing amid a situation when on-site due diligence is limited due to the pandemic. “It is true that it is difficult to make an investment decision without visiting the site. Most of the VCs are having the same problem,” another VC source said. (Reporting by Younjae Lee)