[Edaily Marketin, Reporter Song Seung-Hyeon ] Domestic startup investment, which had surged to twice last year’s level in the first half of the year, has slowed in the third quarter, falling short of last year’s levels. While cumulative investment exceeded 10 trillion won for the first time in four years, analysts say the significance of this figure is diminished because it includes secondary market transactions worth around 2 trillion won. With the stock market plummeting and the initial public offering (IPO) market cooling off since October, observers predict that the investment slowdown could intensify further in the fourth quarter.

According to the startup investment data platform The VC on the 29th, domestic startup investment for the first three quarters of this year totaled 10.188 trillion won. This marks the first time annual investment has exceeded 10 trillion won since 2022, which was a boom period for investment. While annual investment remained in the 7 trillion won range in 2024 and 2025, this year’s total surpassed that figure in just the first three quarters. This is due to a series of large-scale investments, primarily in AI companies, following the investment freeze that began in the second half of 2022.

This record-breaking investment figure was influenced by the Dunamu equity transaction finalized last June. This was a secondary market transaction—a purchase of existing shareholders’ stakes worth 2.216 trillion won—and does not constitute an investment in a startup. Unlike investments in new shares, which are used to fund a company’s growth, this transaction merely changed the ownership of existing shares; however, it was included in the investment tally. This single transaction accounts for more than 20% of this year’s cumulative investment. Excluding Dunamu, the cumulative investment amount drops to around 8 trillion won.

In fact, excluding the Dunamu transaction, investment has been on a downward trend since the third quarter. Third-quarter investment totaled approximately 2.2 trillion won, about 35% less than the second quarter (around 3.4 trillion won) when Dunamu is excluded. Compared to the third quarter of last year, the amount decreased by 9.2% and the number of deals fell by 3.4%. Investment, which had been rising sharply in the first half of the year, fell below the previous year’s level in the third quarter. While major AI companies drove the market upward in the first half by securing investments in the tens of billions of won one after another, this momentum did not carry over into the third quarter.

As investment has declined, a clear polarization has emerged, with funds becoming even more concentrated in specific sectors. The AI and robotics sectors accounted for 45% of total investment in the third quarter. Investment also increased significantly year-over-year in certain sectors such as AI semiconductors, biotechnology, and defense. In contrast, early-stage investment in sectors other than AI and robotics fell by 28% compared to last year. This means it has become even more difficult for early-stage companies outside of high-profile sectors to secure investment. This concentration of capital has continued into the fourth quarter.

The industry is also taking a pessimistic view of the fourth-quarter outlook. Since the start of this month, the KOSPI has fallen to its lowest level in seven months, and the KOSDAQ has also slipped to its lowest level in three months. As foreign investors continue to sell off, a wait-and-see mentality has taken hold across the market. The IPO market is also experiencing turbulence. Ellis Group, which garnered attention this year as KOSDAQ’s first “1 trillion won IPO,” raised 10 trillion won in subscription deposits but closed at a price 32% below its offering price on its first day of trading on the 20th. Investors holding stakes in unlisted companies are also facing delays in recouping their investments.

From a venture capital (VC) perspective, this means the avenues for recouping investment through IPOs are narrowing. If exits are blocked, the funds available to return to limited partners (LPs) decrease, and the capacity to form new funds or make new investments also shrinks. Companies in need of follow-on funding may find themselves in a situation where they must secure capital even at the cost of lowering their valuation. This is why the contraction seen in the third quarter could become even more pronounced in the fourth quarter.

A venture capital industry insider stated, “While the fourth quarter is typically a season when investment activity increases, this year—due to prolonged high interest rates and stock market volatility—the atmosphere makes it difficult to launch new deals beyond ‘survival support’ focused on follow-on investments,” adding, “With valuations of startups, including those in the AI sector, having risen, everyone is taking a wait-and-see approach.”