Angel Investment Exceeds W100 Billion for First Time Since 2003

The SMBA says the recent swelling of angel funds is primarily due to the introduction of ‘angel matching funds’ in which a matching investment is put into a venture enterprise that an angel investor is investing in, as well as the expansion of tax incentives for angel investors. (image: Pixabay)

SEOUL, July 27 (Korea Bizwire) – The Small and Medium Business Administration (SMBA) of South Korea announced on July 26 that last year’s angel investment – funds provided for start-up businesses – increased by 67.7 percent, exceeding 100 billion won ($88 million) for the first time since 2003.

Considering the tax exemption limit law, investment profits earned in 2015 are deducted from income tax until 2018, so actual investment likely exceeded 140 billion won ($123 million).

After the venture business bubble burst in 2004, angel investment plummeted to 46.3 billion won ($40.8 million), but has steadily increased by more than 50 percent annually since 2013.

Compared to 2014, investment increased from 40.6 billion won to 44.6 billion won (9.8 percent increase), and the number of investment unions formed in 2015 also surged from 55 to 89 (a 61.8 percent increase), and had already exceeded 100 by the end of the first half of 2016.

A total of 295 corporations received angel funds in 2015, a 42.5 percent increase from the year before. The number of angel investors, as of the end of the first half of 2016, went up by 19.5 percent to 11,314 compared to the end of 2015.

As more angel funds are being invested in start-up businesses, companies receiving such investments have started to form partnerships with larger, global corporations or even receive subsequent investment from venture capital (VC) firms.

Seerslab, a start-up that developed a video application for mobile devices, received 400 million won ($352,000) through angel funds and $1.3 million in subsequent investment from Y Combinator, an American seed accelerator.

Korea Bio Plant Co., too, was the recipient of angel funds of 400 million won, along with a 6.2 billion won investment from VC firms.

The SMBA says the recent swelling of angel funds is primarily due to the introduction of ‘angel matching funds’ in which a matching investment is put into a venture enterprise that an angel investor is investing in, as well as the expansion of tax incentives for angel investors.

“As angel funds reached a record high last year, the venture investment ecosystem is picking up pace,” said Park Yong-sun, director of venture investment at the SMBA.

By Nonnie Kim (nkim@koreabizwire.com)