[기자수첩]Adventure ecosystem in crisis when the government intervenes

[이데일리 강경래 기자] “I am concerned that the contraction in venture capital investments could turn into a crisis in the entire corporate ecosystem.”

Min-seon Noh, a researcher at the Small and Medium Venture Business Research Institute, said: “This is the ‘golden age’ when venture capital investments start to shrink. It is time for the government to act quickly so that the ecosystem of the enterprise does not collapse, “he said.

With the rapid freezing of venture capital investments in recent years, the sense of crisis among venture capital firms increases. This is due to the economic slowdown at home and abroad due to rising interest rates, inflation (inflation) and the protracted war between Russia and Ukraine.

In fact, the Ministry of SMEs and Startups announced that venture capital investment in the third quarter of this year was 1.25 trillion won, down 40.1% from 2.91.3 trillion. won in the same period last year. This is the first quarterly decline in two years since the second quarter of 2020, when the “Corona Pandemic” (infectious disease pandemic) hit. If this trend continues into the fourth quarter of this year, year-on-year venture capital investments will experience negative growth for the first time in 14 years since the 2008 financial crisis.

Therefore, when venture capital investments decline, warning signs are detected in various parts of the industry. A representative of a mobility services company I met recently complained that he visited five venture capital firms to raise 2 billion won in operating capital, but all were turned down. Last year alone, the company received an offer to sell it for a company value of 16 billion won. However, in the second half of this year, the mood quickly turned around.

Therefore, when venture capital firms find it difficult to raise funds, the structure of the virtuous cycle of the venture ecosystem, from investment to growth, to recovery and reinvestment, is blocked from the very first phase of the investment. It is obvious that this could soon escalate into a crisis across the business sector.

High inflation, high exchange rates and high interest rates are expected to continue into the next year. In particular, it is highly likely that the amount of money flowing into the venture capital sector will decrease in the future due to high interest rates. The government should broaden incentives so that the hard-to-create “business boom” does not cool down by loosening regulations to induce various private funds to flow into venture companies.