VC Exit Path Shifts From Equity Sales to IPOs... Proportion Reaches 37.9%

Samjong KPMG: "IPO Market Trends Through the Lens of VC Investment"

Share of Exits via Sale Drops From 56.5% to 47.7%

Many Withdrawals and Rejections Linked to Performance Issues

Venture capital (VC) firms are increasingly shifting their exit strategy from equity sales to initial public offerings (IPOs). The proportion of exits through IPOs rose from 24.3% in 2022 to 37.3% last year, and 37.9% in the first half of this year. In contrast, the proportion of exits through sales fell from 56.5% during this period to 47.7%.

On September 8, Samjong KPMG released a report titled "IPO Market Trends Through the Lens of VC Investment," highlighting these trends. The report noted that as venture investment is concentrated in future growth sectors such as artificial intelligence (AI), semiconductors, and biotechnology, companies with strong technological capabilities and growth potential now have increased opportunities to enter the IPO market.

The avenue for IPOs opened earlier in the KOSDAQ market. The proportion of technology firms going public via exceptions for technological or growth merits—regardless of current profitability—has increased from 25.7% in 2018 to 56.3% in the first half of this year. In other words, more than one out of every two new KOSDAQ listings now utilize such special exceptions.

Investment Funds Concentrated in Verified Companies

Funds awaiting exit are also on the rise. Last year, new venture investments in Korea reached 13.6244 trillion won, a 14.0% increase over the previous year. In the first half of this year, investment surged to 8.8676 trillion won—a 56.2% year-on-year increase.

However, the distribution of capital has not been even. The average investment per portfolio company increased from 2.54 billion won in 2024 to 3.01 billion won in 2025 and 3.86 billion won in the first half of this year. Investments in early-stage companies less than three years old also jumped 57.7% compared to the same period last year. The report attributes this to an increase in early-stage investments from government seed funds and large-scale investments in deep-tech (fundamental technology) startups focused on AI, semiconductors, and robotics.

By industry, in the first half of this year, bio and healthcare attracted 1.5 trillion won in investments (up 92.7%), electronics, machinery and equipment secured 1.5 trillion won (up 54.0%), and ICT manufacturing raised 1.1 trillion won (up 146.9%). On an individual company basis, Rebellion secured 640 billion won in pre-IPO investments, while FuriosaAI attracted 400 billion won.

83% of Withdrawals or Rejections Stem From Performance Issues

Even though the IPO pathway has broadened, the barriers to entry remain high. The report analyzed that 83% of companies that withdrew or failed to receive approval during the preliminary listing review from last year to the first half of this year were affected by revenue stability, performance volatility, growth potential, or profitability issues.

The report also explained that even IPOs utilizing technology exceptions are now subject to more rigorous scrutiny—not just for technological originality, but for business viability. This includes greater verification of the target market's scale and growth potential, customer base, manufacturing capacity, and capital-raising ability.

The report advised IPO hopefuls to build a solid performance track record that can be maintained even after going public, rather than focusing solely on short-term public offering popularity. It suggests companies should review, prior to listing, their customer dependency, the collectibility of accounts receivable, the possibility of inventory accumulation, and whether projected sales based on secured orders are reasonable. Internal controls, management of related-party transactions, and the terms for converting redeemable convertible preferred shares (RCPS) and convertible bonds (CB) into equity were also highlighted as important management factors.

Kang Inhye, head of the IPO Support Center at Samjong KPMG, stated, "An IPO is not a short-term event that ends with listing approval or maximizing the offering price; it is a process that requires continuous management of both post-listing performance and stock price. Companies preparing for listing should preemptively establish the basis for their projected earnings, internal controls, utilization plans for offering proceeds, and strategies to mitigate overhang risk (the appearance of large sell orders)."

There was advice for VCs as well. Kang added, "VCs should not view listing as the immediate point for recovery, but instead formulate a phased exit strategy that considers lock-up periods (which prevent shareholders from selling stocks for a set period after listing) and market absorption capacity. From the investment stage through to post-IPO, it is increasingly important to adopt a long-term investment and exit strategy."

This content was produced with the assistance of AI translation services.