Korean conglomerates invest $3.01 bn in startups over past 2.6 years

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South Korea’s major corporations have made direct equity investments of more than 4 trillion won ($3.01 billion) in emerging startups over the last two and a half years. The sector that received the most external equity investments during the surveyed period was the content and entertainment industry.

According to an analysis report from Leaders Index, 298 companies acquired stakes in other companies, excluding subsidiary investments, from 2021 to the first half of 2023 based on the business reports submitted by 354 of the top 500 companies ranked by revenue. The total investment amount totaled 20.77 trillion won.

Among these investments, indirect investments through investment associations accounted for 16.33 trillion won, or 78.6 percent of the total. There were 2,922 target companies for indirect investments.

Direct equity investments were made in 844 target companies, with a total equity investment amount of 4.3 trillion won. The report showed that most of the companies that received direct equity investments were startups.

The total amount of equity investments in other companies fell from 2.12 trillion won (330 target companies) in 2021 to 1.29 trillion won (335 target companies) last year. In the first half of this year alone, it amounted to 1.1 trillion won (179 companies).

By industry, the sector that received the largest amount of investment was content and entertainment. Over the past two and a half years, large corporations invested 1.14 trillion won in 99 companies in this sector.

The secondary battery sector came second, receiving 1.04 trillion won in investments across 64 companies, while the aerospace sector received 477 billion won across 48 companies. The pharmaceutical and biotechnology sector received 437 billion won (173 companies), the application and platform services 290.6 billion won (18 companies), and AI/big data 205.1 billion won (122 companies).

Naver was identified as the company that made the most direct equity investments in other companies since 2021, investing 597.8 billion won in 63 companies. Hybe was the second-largest contributor, investing 437.6 billion won in eight companies during the same period, with the majority of its investments going to SM Entertainment.