[Edaily Marketin, Reporter Soyoung Park ] The growth formula for global startups is changing. The focus is shifting from rapidly launching products and services and pivoting (changing business models) multiple times to demonstrating solid “revenue” and a sustainable business structure from the outset. The domestic venture capital market is also trending toward a structure where investment funds are selectively allocated to a small number of promising companies. Analysts note that companies must prove their actual business viability rather than merely demonstrating superficial growth to attract investors.

According to the global investment banking (IB) industry on the 22nd, the key criteria for evaluating startup investments are shifting from growth potential to verifying revenue and business sustainability. This means that investors are now looking to see if a startup has secured a clear customer base and business model (BM) from the early stages and has the ability to generate actual revenue.

This shift is driven by the proliferation of generative AI, which has accelerated product and service development and led to a flood of similar offerings. The era when startups could secure large-scale investments simply based on strong technical capabilities or innovative ideas is over.

An official from a global accelerator (AC) described the current trend, stating, “For AI startups, the barriers to entry for the technology itself are gradually lowering,” and added, “Business validation metrics—such as annual recurring revenue (ARR), revenue growth rate, and customer retention rate—have become more important than before.”

Due to this trend, there is also growing talk that the “quality of revenue” should be scrutinized more closely than the numbers themselves. TechCrunch reported, “Recently in Silicon Valley, a trend has emerged where many venture capital (VC) firms are not even considering startups that have not achieved $100 million (approximately 132.4 billion won) in ARR before raising Series A funding.”

TechCrunch also pointed out that some founders are announcing ARR figures or growth rates without properly calculating ARR. Therefore, it advised that finer details, such as business quality and sustainability, should also be examined.

Given this situation, a trend has emerged in the U.S. where other investors follow the lead of major global VCs—such as Sequoia and Andreessen Horowitz (a16z)—in investing in startups these firms have already backed. Investors are willing to invest because they trust companies that have received funding from these major global VCs.

In fact, global market research firm PitchBook, in its assessment of the U.S. VC market for the first quarter of this year, analyzed that investment capital is concentrated on a small number of promising companies. Of the total investment amount of $267.2 billion (approximately 353.6392 trillion won), $195.6 billion (approximately 258.8766 trillion won) was concentrated in the top five deals, accounting for 73.2%. PitchBook dubbed this the “era of consensus deals.” Its assessment is that the phenomenon of investors concentrating funds on a select few companies—deemed “top deals”—is intensifying.

VC industry insiders note that the sentiment in the domestic venture capital market is not much different. This means that investment decisions are no longer based solely on rapid growth in scale, as was the case in the past. Instead, investment criteria have shifted to include a comprehensive assessment of a business’s sustainability—such as actual revenue, profitability, and cash flow.

According to the report “IPO Market Trends as Reflected in VC Investment” released last month by the Samjung KPMG Economic Research Institute, the scale of venture capital investment in late-stage companies—those with more than seven years of operation—has steadily increased, reaching 300 million won in the first half of 2024, 310 million won in 2025, and 470 million won in 2026. Samjeong KPMG assessed that this trend reflects an investment strategy that prioritizes both growth and profitability.

An official from a domestic VC firm stated, “Recently, many firms have been forced to focus on deep-tech investments, such as in high-tech industries, so they are closely scrutinizing technology companies,” but added, “We can’t wait indefinitely just because a company has excellent technology, and in fact, there are often cases where companies go out of business because they lack business acumen and fail to commercialize their products successfully.” He continued, “Ultimately, funds must generate returns, so they tend to focus more on companies that actually generate recurring and sustainable revenue.”