Korean AI startups yet to join global unicorn club

The number of artificial intelligence unicorns has been on the rise thanks to the AI boom, but none of these South Korean AI startups have yet to join the club.

In the world’s 11th-largest economy, consumer platforms dominate the list of unicorns, or private companies with a corporate value of $1 billion or more.

However, Korean AI startups, led by fabless AI chip maker Rebellions Inc. and large language model developer Upstage Co., have raised a bigger amount of funding this year than in previous funding rounds, raising hopes that they would become the country’s first AI unicorns.

As of the end of March this year, the number of AI unicorns increased to 219 worldwide from 214 in 2023, according to data provider CB Insights.

Six AI unicorn companies, including one each from Italy and India, joined the ranks in the first quarter, while one dropped from the list.

Half of them come from the US, namely Figure AI, Together AI and ElevenLabs.

MOONSHOT AI

Moonshot AI, 36% owned by Chinese Big Tech firm Alibaba, stood out among the six new AI unicorns.

Less than a year after its inception in April last year, the AI chatbot developer’s enterprise value is now estimated at $2.5 billion, almost double the $1.3 billion estimate at the end of March this year.

Its founder Yang Zhilin had worked as an intern at Google and Meta, the parent company of Facebook.

INVESTMENTS IN AI STARTUPS

In the January-March quarter, investments in global AI startups shrank by 25.1% to $13.1 billion from $17.5 billion in the same period last year.

But the number of mega rounds, or funding sized at more than $100 million, doubled from 11 to 22 over the same period. This suggests polarization in the AI venture capital market. 

The company that raised the most funds in the quarter was Anthropic, an AI safety and research company based in San Francisco.

South Korea’s unicorn enterprises include the pioneer of fresh produce dawn delivery Kurly; street fashion online mall Musinsa, backed by KKR & Co.; real estate transaction services provider Jigbang; and the country’s No. 1 travel and accommodation booking app Yanolja, invested in by SoftBank.

Despite the lack of government support, infrastructure and talent for AI startups, the country’s venture capital market is growing rapidly.

In the first quarter of this year, domestic AI startups raised a total of 326.8 billion won ($240 million), compared with 89.8 billion won in the same period the year prior, according to The VC, a startup investment tracker in South Korea.

“There is a widespread feeling in the VC industry that we should not miss out on an opportunity to invest in promising AI startups,” said a venture capital company official specializing in corporate-backed funding.

“The government and institutional investors also strongly encourage investment in deep tech such as AI startups.”

In January this year, Rebellions’ corporate value was estimated at 880 billion won for its latest funding of 165.0 billion won.  

Last month, Upstage raised 100 billion won in a Series B funding round, with its enterprise value estimated at 500 billion won.

Write to Joo-Wan kim at kjwan@hankyung.com

Yeonhee Kim edited this article.