[Edaily Marketin Won Jae-yeon Reporter] Venture capital (VC) funds are flowing toward existing portfolio companies rather than new startups. Amid ongoing uncertainty in the venture capital market, this trend reflects a move to reduce investment risk by concentrating additional funding on companies with proven management teams, technological capabilities, and business performance.

According to the venture capital industry on the 4th, the recently concluded Series B funding round for AI semiconductor startup Exina saw a massive influx of follow-on funding from existing investors. In addition to SBI Investment, Mirae Asset Venture Investment, and STICK Ventures—which had participated in previous investment rounds—reinvesting, Atinum Investment and IMM Investment jointly led the round, and new investors also joined. As a result, the round, which was initially planned to be 100 billion won, was expanded to 200 billion won and successfully closed.

Beyond Exina, there have been a series of cases where existing investors have reinvested in recent major funding rounds. This approach involves increasing investment scale by participating in follow-on rounds for companies with confirmed growth potential, rather than discovering new companies from scratch.

Existing shareholders invested approximately 170 billion won in the Series D round of AI semiconductor company FuriosaAI. DSC Investment participated in every funding round from the seed stage through Series D, while Naver Ventures and KDB Capital also joined the follow-on investment. In effect, they maintained the stakes they secured in the early stages while placing an additional bet on the potential for the company’s value to rise as the AI semiconductor market expands.

MID, a space components company that raised 15.7 billion won in Series A funding late last month, also received follow-on investment. DSC Investment and Schmidt, which had invested during the pre-Series A stage, participated again, while the Industrial Bank of Korea, Medici Investment, IBK Capital, and POSCO Technology Investment joined as new investors. The renewed participation of existing investors is seen as reinforcing confidence in the company’s technological capabilities and business performance, thereby helping to attract new investors.

Follow-on investments are not limited to deep-tech sectors such as AI and semiconductors, which require substantial R&D funding. In the 10 billion won Series B round for Bind, which operates the men’s fashion platform Asler, existing investors including Kakao Ventures, Base Ventures, Dasung Ventures, and D.Camp also reinvested. As revenue and user numbers grew rapidly following the previous investment, existing shareholders confirmed the company’s business performance and decided to make additional investments.

The venture capital industry expects this trend of follow-on investments—injecting additional funds into existing portfolio companies—to continue for the foreseeable future. Investing in a new company requires verifying everything from management capabilities to technological competitiveness, market size, and financial health from the very beginning. In contrast, with existing portfolio companies, investors can continuously monitor business progress and fund utilization through board meetings and regular reports, thereby reducing the time and cost involved in making investment decisions.

According to the Ministry of SMEs and Startups, of the 5.2014 trillion won in venture capital invested last year across 12 key emerging industries, follow-on investments totaled 4.5624 trillion won, accounting for 87.7%. New investments amounted to 639 billion won, representing just 12.3%. The share of follow-on investments rose by 4.4 percentage points from 83.3% in 2024 to 87.7% just one year later.

Since the start of this year, the bar for early-stage companies to secure investment has also risen. In the first quarter of this year, the number of early-stage investment deals—from seed to Series A—decreased by 23.7% compared to the same period last year, while the total investment amount increased by 6.4%. Although the number of deals decreased, the amount invested per company increased. Analysts note that there is a growing trend toward concentrating funds on a select few companies that have demonstrated technological capabilities or revenue performance, rather than spreading investments across multiple new companies.

The ability to prevent equity dilution is another reason VCs are pursuing follow-on investments. If additional funds are not injected in subsequent rounds, existing investors’ equity stakes will be diluted due to the issuance of new shares. Conversely, by continuing to invest in companies with high growth potential, VCs can maintain their equity stakes while also increasing their returns as the company’s valuation rises. Given the nature of VCs, where a small number of successful companies determine the fund’s overall return, there is a strong incentive to concentrate capital on companies that have already demonstrated results.

Early-stage investment firms are also expanding strategies that go beyond seed investments to accompany companies through their growth stages. This involves establishing separate growth-stage funds or project funds to participate in rounds following Series A for their existing portfolio companies. The strategy is to directly provide follow-on funding to promising companies identified in the early stages—rather than handing them over to other VCs—and to share in the returns generated by their growth.

A VC industry insider noted, “Since we already understand the management situation and business performance of our existing portfolio companies, the appeal of follow-on investments increases during periods of high uncertainty.” However, they added, “If only existing shareholders continue to inject capital without the participation of external investors or an increase in enterprise value, we must also consider the possibility that this is a defensive investment aimed at deferring losses rather than a growth investment.”