'I Thought I'd Make a Fortune on KOSDAQ'... Investors Still on Edge After Listing [VCs Now]

IPOs Account for a Growing Share of VC Exits, but
Changing Market Criteria Make Share Price Management More Important
"IPO Success Criteria Are Shifting... Focus Turns to Realizing Returns"

As the supply of growth capital expands and policies to address the "Korea discount" gather momentum, venture capital (VC) firms are changing how they think about initial public offerings (IPOs), once seen as the final step in an investment. Venture investment has reached a record high, fueled by increased contributions from policy funds such as the Korea Fund of Funds. However, tougher requirements aimed at improving the stock market's fundamentals have made it more difficult to remain on the market after listing. In the past, VCs could sell their shares after the post-listing lockup expired and return the proceeds to their limited partners (LPs). Now, some say that "managing an investment after a company goes public is even more difficult."

According to the Venture Investment Comprehensive Portal, IPOs accounted for 37.9% of VC exits in the first half of 2026, up from 24.3% in 2022. But cash recovery is lagging. Major VCs sold 14.9% of their stakes in companies that listed on KOSDAQ in 2026 within 120 days of their IPOs, less than half the rate of around 30% recorded in each of the past four years.

In a report published last month, Samjong KPMG said, "As the supply of growth capital and listing pathways have expanded, funding has become concentrated in proven late-stage companies and strategic industries. IPO reviews have become more rigorous, with a greater focus on business viability and performance, while post-listing disclosure, shareholder protection and listing-maintenance requirements have also tightened." The report concluded that "the benchmark for IPO success is shifting from completing a listing to establishing a foothold in the market and realizing actual returns." In other words, the key question is no longer whether a company can go public, but whether it can remain on the market afterward and at what price investors can sell their shares.

Regulatory Uncertainty Narrows VC Exit Routes

Technology-special listings are a major exit route for VCs seeking to take loss-making companies they invested in at an early stage public. In the first half of 2026, 56% of newly listed KOSDAQ companies qualified for technology-special listings. Yet 81.5% of the 216 companies listed through this route over the past seven years reported operating losses in 2025. Since July 2026, technology-special listing companies have had to disclose a corporate value-up plan to qualify for a grace period against delisting due to factors such as failing to meet sales targets. But only seven of the 257 companies in the Technology Growth Company Division, or 2.7%, have filed a full disclosure. Samjong KPMG said, "If post-listing performance, disclosures and trading liquidity are not sufficient, the end of the lockup does not guarantee that VCs can sell their shares or that the listed company can retain its listing."

A KOSDAQ-listed company is designated as an administrative issue if its market capitalization remains below KRW 20 billion for 30 consecutive trading days. If it then fails to meet the threshold for 45 consecutive trading days within the following 90 trading days, it becomes subject to delisting. Once designated as an administrative issue, a company's trading activity tends to decline and its share price is more likely to come under pressure, narrowing the exit options for investors who need to sell their remaining shares.

Debate has also arisen over criteria that are seen as difficult to predict. As financial authorities have made "value-up" a priority and accelerated efforts to delist underperforming stocks, the minimum market capitalization for KOSDAQ-listed companies to avoid delisting was raised from KRW 4 billion early in 2026 to KRW 15 billion, and then to KRW 20 billion in July. The planned increase to KRW 30 billion next year has been delayed by six months. At a parliamentary audit on October 7, Lee Soyoung, Minister of SMEs and Startups, said, "Judging companies solely by market capitalization could lead to unfair outcomes." The next day, Lee Eog-weon, chairman of the Financial Services Commission, countered that it was "a minimum threshold." A VC industry official said, "No VC would disagree with the stock market value-up program," but added, "Conflicting policy messages from different ministries at different times, along with concerns that the criteria could change again, are clearly sources of investment uncertainty."

Planning Beyond the Listing

As the supply of growth capital increases, the calculations around IPO prices have also become more complex. In the first half of 2026, KRW 4.7 trillion flowed into late-stage companies with more than seven years of operating history, lifting the average investment per portfolio company to KRW 3.86 billion from KRW 3.01 billion in 2025. With investment costs rising, deciding on an IPO price has become another challenge for VCs.

Sky Labs and Lemon Healthcare, whose lockups expired on October 6, illustrate how post-listing performance can diverge depending on IPO pricing. Both companies operate in the healthcare sector and had the same IPO price of KRW 10,000 per share. Sky Labs' share price reached KRW 17,430 during the trading session that day, 74% above its IPO price. From that day, 16 VCs and other financial investors (FIs) were able to sell their combined 2.88 million shares, worth about KRW 50 billion. By contrast, Lemon Healthcare was trading at KRW 3,910, or 39% of its IPO price, leaving existing investors who bought in around the IPO price facing inevitable mark-to-market losses.

Sky Labs set its IPO price below not only the lower end of its indicative range of KRW 13,000 to KRW 16,000, but also its pre-IPO investment price of KRW 12,681. Existing investors accepted an IPO price below their investment cost, but the post-listing rise in the share price has put pre-IPO investors in a position to earn returns of about 1.4 times their investment. Lemon Healthcare, by contrast, set its IPO price at the top of its indicative range. Still, Sky Labs' shares have merely become "eligible" for sale; the exit process is not complete. Whether 2.88 million shares can be absorbed without disrupting the share price is a separate question.

Samjong KPMG said, "A listing is not the completion of an exit but the beginning of establishing a foothold in the market and managing remaining shares." It added, "Companies and VCs now need to jointly manage short- and long-term business plans and performance, as well as supply and demand, after listing. They also need to oversee and implement measures such as disclosing corporate value-up plans, which are essential in practice."

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