OCDE - Financing SMEs and Entrepreneurs 2026 - Corea de 2026

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FINANCING SMES AND ENTREPRENEURS 2026: KOREA © OECD 2026

Key facts on SME financing In 2024, the South Korean economy showed a modest recovery following two years of subdue d growth. Real GDP expanded by 2.0%, driven mainly by an export rebound in semiconductors and automobiles, while domestic demand remained weak due to persistently high interest rates and subdued household spending. Corporate debt continued to rise steadily, reaching KRW 1,350 trillion by the end of 2024, as firms, particularly large enterprises, relied more heavily on bank loans amid tighter bond-market conditions and elevated funding costs. Despite monetary tightening, SMEs maintained positive loan growth. Outstanding SME loa ns increased from KRW 993 trillion in 2022 to about KRW 1,086 trillion in 2024, supported by policy-based financing and credit guarantees. However, the higher interestrate environment constrained profitability and borrowing capacity, especially for domestic-oriented firms. The average lending rate for SMEs rose to 5.0% in 2024, compared to 4.1% in 2022, while the spread with large-corporate loan rates nar rowed to around 0.1 percentage points, indicating a near convergence in borrowing costs. Venture investment, after peaking at KRW 7.68 trillion in 2021, contracted to KRW 6.76 trillion in 2022 and KRW 5.40 trillion in 2023 before recovering slightly to KRW 6.63 trillion i n 2024. Early-stage companies continued to attract the largest share of new investment, supported by government-backed funds targeting AI, green technologies, and mobility sectors. After nearly a decade of steady improvement, credit quality showed mild deterio ration as policy forbearance measures wound down. The SME non-performing loan (NPL) ratio, which fell from 1 .8% in 2015 to 0.56% in 2022, increased to 0.83% in 2024, while the average payment delay on short-term SME

forbearance measures wound down. The SME non-performing loan (NPL) ratio, which fell from 1 .8% in 2015 to 0.56% in 2022, increased to 0.83% in 2024, while the average payment delay on short-term SME loans stood at about 9.8 days (from 10.1 in 2023), reflecting persistent liquidity pressures. The government and policy banks continued to support SMEs through credit guarantee s, loan restructuring, and targeted liquidity programmes, but with the gradual normalisation of macr oprudential measures, many crisis-era supports were phased out. As a result, SMEs now face a dual challenge: adapting to a structurally higher cost of capital while operating with fewer policy buffers. Elevated financing costs, increased competition for bank credit, and lingering PF-related risk aversion together define the post-crisis financial landscape for Korean SMEs. This environment underscores the broader macroeconomic reality of an economy that, while showing resilience through ex ports, still faces internal vulnerabilities rooted in weak domestic demand and tight financial conditions. Since April 2020, the government’s Loan Maturity Extension and Repayment Deferral Programme has remained the central support mechanism for SMEs and self-employed busine sses. As of late 2024, the outstanding balance of extended or deferred loans had declined to KRW 53 trill ion, with repayment schedules allowed until September 2028. Complementary measures, including the Soft-La nding Debt Adjustment Programme, Hope Loan Step-Up, and special guarantees for lowto medium-credit borrowers, continued to provide targeted relief and refinancing options for viable but financially strained firms. Korea2 

FINANCING SMES AND ENTREPRENEURS 2026: KOREA © OECD 2026

Table 1 . Scoreboard for Korea Indicators Units 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Debt

Table 1 . Scoreboard for Korea Indicators Units 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Debt Outstanding business loans, SMEs KRW trillion 455 462 489 522 561 610 655 696 747 836 922 993 1 041 1 086 Outstanding business loans, total KRW trillion 586 618 654 706 756 776 817 857 906 1 020 1 114 1 222 1 305 1 381 Share of SME outstanding loans % of total business loans 77.7 74.7 74.7 74.0 74.2 78.6 80.2 81.2 82.4 82.0 82.8 81.3 79.8 78.6 Outstanding Short-term loans, total; loans for operation KRW trillion 388 395 405 419 426 414 419 429 462 528 558 611 649 677 Outstanding Long-term loans, total; loans for equipment KRW trillion 197 223 249 287 330 362 398 428 444 492 555 610 657 704 Share of short-term loans; loans for operation KRW trillion 66.3 63.9 61.9 59.3 56.3 53.4 51.3 50.1 51.0 51.8 50.1 50.1 49.7 49.0 Government loan guarantees, SMEs KRW trillion 55 57 59 60 61 63 66 67 69 80 85 87 89 90 Government guaranteed loans, SMEs % of SME business loans 12.2 12.3 12.2 11.5 10.9 10.3 10.0 9.7 9.2 9.6 9.2 8.8 8.6 8.3

Government guaranteed loans, SMEs % of SME business loans 12.2 12.3 12.2 11.5 10.9 10.3 10.0 9.7 9.2 9.6 9.2 8.8 8.6 8.3 Direct government loans, SMEs KRW billion 2 957 3 149 3 715 3 270 3 902 4 551 4 666 4 415 4 358 6 290 6 010 5 440 4 547 4 566 Non-performing loans, total % of all business loans 1.73 1.66 2.39 2.09 2.56 2.06 1.76 1.88 1.45 1.17 0.91 0.68 0.75 0.85 Non-performing loans, SMEs % of all SME loans 2.17 1.96 2.11 1.94 1.64 1.3 1.11 1.10 0.94 0.79 0.60 0.56 0.67 0.83 Interest rate, SMEs % 6.36 5.93 5.11 4.69 3.95 3.63 3.62 3.82 3.71 3.06 2.92 4.13 5.31 4.99 Interest rate, large firms % 5.81 5.50 4.87 4.51 3.79 3.40 3.31 3.45 3.38 2.83 2.74 3.84 5.04 4.90 Interest rate spread Percentage points 0.55 0.43 0.24 0.18 0.16 0.24 0.31 0.37 0.33 0.23 0.19 0.29 0.27 0.09 Rejection rate %, 1 – (SME loans authorised/ requested)

Rejection rate %, 1 – (SME loans authorised/ requested) 6.9 3.7 12.2 12.9 15.5 10.4 16.1 19.1 16.6 2.4 Utilisation rate SME loans used/ authorised, % 91.14 82.31 82.65 90.70 88.17 94.15 88.93 91.36 93.12 95.08 97.91 95.04 95.11 94.66 Non-bank finance Venture and growth capital KRW billions 1 261 1 233 1 385 1 639 2 086 2 150 2 380 3 425 4 278 4 305 7 680 6 764 5 398 6 632 Venture and growth capital (growth rate) % 15.6 -2.2 12.3 18.4 27.2 3.1 10.7 43.9 24.9 0.63 78.4 -11.9 -20.2 22.9 Leasing and hire purchases KRW trillions 21.6 20.6 22.6 25.5 28.3 29.5 32.9 34.7 36.1 39.0 39.3 42.5 41.5 41.0 Other indicators Payment delays, SMEs Number of days past due date 11.7 9.1 9.7 10.0 9.2 13.3 8.9 7.4 8.4 8.5 8.6 9.2 10.1 9.8

Source: See Table 2. 3

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Macroeconomic and financing conditions South Korea’s economic performance over 2023 and 2024 illustrates a gradual recovery from pandemicSource: See Table 2. 3

FINANCING SMES AND ENTREPRENEURS 2026: KOREA © OECD 2026

Macroeconomic and financing conditions South Korea’s economic performance over 2023 and 2024 illustrates a gradual recovery from pandemicera stagnation but also a persistent structural divide between strong export-led growth and weak domestic demand. In 2023, real GDP expanded by only 1.4 per cent, marking one of the slowest growth rates since the global financial crisis. Private consumption rose merely 1.8 per cent, as households struggled under the combined pressure of high interest rates, elevated living costs, and rising debt-service burdens. Facility investment remained subdued during the first half of the year, while construc tion activity contracted amid tighter financial conditions and a cooling property market. However, exports began to rebound i n the second half of 2023 as the global semiconductor market stabilised and automobile sh ipments surged, helping to narrow the trade deficit. Although exports for the year as a whole decli ned by 7.4 per cent and imports by 12.1 per cent, the turnaround from October 2023 onward signalled that the external sector was regaining momentum. The recovery carried into 2024, when Korea’s GDP expanded by approximately 2.0 per cent, according to preliminary data from the Bank of Korea. The rebound was driven primarily by strong external demand, led by semiconductors, automobiles, shipbuilding, and secondary batteries. The curr ent account surplus widened to about USD 99 billion, the largest since 2021, reflecting improved terms of tr ade and robust export volumes. Yet, despite this headline improvement, the growth pattern remained unb alanced. Domestic demand continued to lag behind: household spending was constrained by per sistent high borrowing costs, weak real-income gains, and subdued consumer confidence, while corporate investment improved only modestly. In short, Korea’s recovery during 2023–2024 remained export-driven rather than consumption-led, with growth heavily reliant on manufacturing competitiveness and global de mand rather than domestic momentum.

borrowing costs, weak real-income gains, and subdued consumer confidence, while corporate investment improved only modestly. In short, Korea’s recovery during 2023–2024 remained export-driven rather than consumption-led, with growth heavily reliant on manufacturing competitiveness and global de mand rather than domestic momentum. These macroeconomic trends were mirrored in financing conditions for firms. Despite a decline in inflation, the Bank of Korea maintained its policy rate at elevated levels through most of 2024, keeping borrowing costs high. For SMEs, this environment translated into sustained pressure on margins and liquidity. Large corporations, facing tighter corporate bond markets and higher short-term funding costs, increasingly turned to bank loans, intensifying competition for credit and indirectly crowding ou t smaller borrowers. While export-oriented SMEs benefited from stronger external demand and improved cash flow, dom esticoriented SMEs, particularly in construction, wholesale, and local services, continued to face weak revenues and growing refinancing risks. Importantly, the 2022 Legoland liquidity shock triggered a broad credit squeeze in Korea’s short -term funding markets, which spilled over into the real estate project financing (PF) sector. Even by 2024, the PF market remained under stress: spreads on PF loans and asset-backed commercial paper (ABCP/ABSTB) widened sharply, and several developers and securities firms experienced severe fund ing constraints, leading to project delays and partial construction halts. The government and financia l authorities responded with emergency stabilisation funds, PF guarantee enhancements, and matu rity-extension programmes, which prevented a systemic liquidity crisis but did not fully r estore market confidence. The lingering PF stress has continued to weigh on overall credit sentiment, tig htening financing conditions for construction-related SMEs and contributing to higher credit-risk premiums across the SME loan market. SMEs in the national economy As of the end of 2023, small and medium-sized enterprises (SMEs) remaine d the cornerstone of South Korea’s business ecosystem, accounting for 99.9% of all enterprises, 80.4% of tot al employment, and

SMEs in the national economy As of the end of 2023, small and medium-sized enterprises (SMEs) remaine d the cornerstone of South Korea’s business ecosystem, accounting for 99.9% of all enterprises, 80.4% of tot al employment, and 44.9% of total corporate sales revenue. According to the Ministry of SMEs and Startups (MSS , 20254 

FINANCING SMES AND ENTREPRENEURS 2026: KOREA © OECD 2026

release), Korea counted 8 298 915 business establishments, up 3.2% (about 256 189 net increase) from the previous year. SMEs employed 19.1 million workers, representing a yearon-year increase of roughly 0.9%, and continued to play a pivotal role in maintaining labour market stability and regional economic activity. Despite their quantitative dominance, SMEs’ share of total sales remains below 50%, underscoring the persistent productivity gap between small and large firms and the vulnerabili ty of microenterprises to cyclical and financial shocks. The performance of SMEs in 2023 –2024 varied sharply across industries, reflecting both cyclical headwinds and ongoing structural transformation. In manufacturing, SMEs faced a two-speed r ecovery. Traditional sectors such as basic metals, metal fabrication, and chemic als continued to suffer from subdued construction activity, weak domestic investment, and high input costs. In contrast, semiconductors, batteries, electronic components, and precision machinery registered s olid recoveries alongside Korea’s broader export rebound in 2024. The semiconductor equipment and materials cluster, in particular, experienced a sharp upturn as the global inventory correction end ed and new investment cycles began. This divergence highlights Korea’s gradual industrial reconfiguration, where competitiveness is increasingly defined by digitalisation, green transition capabilities, and integration into advanced manufacturing value chains rather than firm size alone. In the service sector, SME activity benefited from the full reopening of the economy and a rebound in mobility, tourism, and logistics. Industries such as accommodation, food services, c ultural and leisure

is increasingly defined by digitalisation, green transition capabilities, and integration into advanced manufacturing value chains rather than firm size alone. In the service sector, SME activity benefited from the full reopening of the economy and a rebound in mobility, tourism, and logistics. Industries such as accommodation, food services, c ultural and leisure services, and transport expanded notably through 2024, supported by both domestic con sumption and a surge in inbound tourism. However, real estate, construction, and wholesale/retail dis tribution remained under strain due to a prolonged high-interest-rate environment, weak housing demand, and tight margins. The aftermath of the Legoland liquidity shock of late 2022, which triggered a credit crunch in project finance (PF) markets, continued to weigh on construction-related SMEs. Even in 2024, the real-estate PF segment remained fragile, with elevated funding costs and delayed projects affecting subcontractors , material suppliers, and regional small builders. Government liquidity backstops, PF guarante es, and stabilisation funds helped avert systemic contagion but did not fully restore investor confidence. The employment and output structure of Korean SMEs continues to display a “dual” patte rn: they sustain around four-fifths of the nation’s jobs but account for less than half of total corporate turnover. More than 80% of SMEs are microenterprises (fewer than 10 employees), whose productivity per worker remains roughly one-third of that of large firms. In contrast, mid-tier firms, medium-sized enterprises with 300 - 999 employees, have expanded modestly, supported by deeper integration into export-oriented supply chains, especially in advanced manufacturing and IT services. These firms increasingly serve as a bridge between startups and conglomerates, facilitating technological diffusion and scaling innovati on across industries. Their growth also signals the gradual emergence of a more diversified SME la ndscape, spanning from microenterprises in domestic services to mid-sized exporters in high-tech sectors. Table 2 . The status of SMEs in Korea, 2023 Total (A) SMEs (B) Small Business (C) Large Enterprises (D)

microenterprises in domestic services to mid-sized exporters in high-tech sectors. Table 2 . The status of SMEs in Korea, 2023 Total (A) SMEs (B) Small Business (C) Large Enterprises (D) % SMEs (B/A) Small Business (C/A) Large Enterprises (D/A) Number of establishments 8 309 696 8 298 915 7 906 861 10 781 99.9 95.2 0.1 Employment 23 767 377 19 117 649 10 899 947 4 649 728 80.4 45.9 19.6 Sales (KRW 100 million) 73 591 237 33 012 545 12 776 045 40 578 692 44.9 17.4 55.1

Source: Ministry of SMEs and Startups. 5

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SME lending In the two years following the 2022 monetary tightening cycle, Korea’s corporate credit landscape underwent a significant transformation. Despite the steep rise in benchmark interest rates, climbing from 1.25% at the start of 2022 to 3.50% by early 2023, corporate debt levels continued to exp and. Bank of Korea data show that total corporate loans reached approximately KRW 1,350 trillion by the end of 2024, up nearly KRW 130 trillion from two years earlier. Much of this increase was driven by large enterpr ises that had traditionally relied on the corporate bond and short-term money markets bu t turned to bank financing amid funding-market disruptions and widening spreads. The turning point was the second half of 2022, when the Legoland incident, triggered by a l ocal government-backed developer’s default, sparked a sharp repricing of credit risk in Korea’s short -term

financing amid funding-market disruptions and widening spreads. The turning point was the second half of 2022, when the Legoland incident, triggered by a l ocal government-backed developer’s default, sparked a sharp repricing of credit risk in Korea’s short -term funding markets. Funding costs for project-finance asset-backed commercial paper (P F ABCP) surged, freezing liquidity in the nonbank segment. As the corporate bond market faced similar tightening , spreads on AA-rated bonds temporarily exceeded 200 basis points; large firms began to sub stitute market-based funding with bank borrowing. This crowding effect strained the loan supply availabl e for SMEs, whose lending rates rose faster and whose access to new credit tightened. By the end of 2022, S ME loans had increased by KRW 70.5 trillion, a slower pace than the KRW 85.9 trill ion expansion seen in 2021, as liquidity was redirected towards large borrowers seeking bank credit. Throughout 2023 and 2024, the environment remained challenging. Persistently hi gh interest rates and a real-estate downturn exacerbated stress in project-finance (PF) loans, with delinq uency ratios for construction-related lending climbing steadily. Several mid-tier construction companies and securities firms faced liquidity constraints as property transactions and new PF issuances dried up . This, in turn, discouraged banks from expanding credit exposure to the sector, amplifying ris k aversion across the financial system. Even as the government activated bond-market stabilisation funds an d expanded PF guarantees, the corporate credit channel remained segmented: credit continued to flow to high-rated or export-oriented firms, while SMEs in domestic-oriented and service industries fac ed tighter underwriting standards. By the end of 2024, outstanding SME loans had reached roughly KRW 1,085 tri llion, compared to KRW 993 trillion in 2022—an increase of about KRW 92 trillion over two years. Although this expansion appears sizable, it masked a pronounced deceleration relative to pre-2022 averages, as real loan growth was

993 trillion in 2022—an increase of about KRW 92 trillion over two years. Although this expansion appears sizable, it masked a pronounced deceleration relative to pre-2022 averages, as real loan growth was eroded by higher borrowing costs. The average lending rate for SMEs climbed to around 5.0% in 2024, up from 4.1% in 2022, while large-firm rates rose to 4.9%, narrowing the spread between the two to near zero. This convergence, while reflecting market normalisation, also indicated that banks passed through elevated funding costs uniformly across firm sizes. As a result, SMEs, particularly those in domestic-facing sectors such as retail, construction subcontracting, and real estate services, experienced mounting liquidity pressures. The tightening of credit lines, combined with the gradual rollback of pandemic-era loan-maturity extensions, led to higher refinancing risk. According to Financial Supervisory Service (FSS) data, the non-performing loan (NPL) ratio for SMEs rose from 0.56% in 2022 to about 0.83% in 2024, while credit guarantees outstanding through KODIT and KIBO increased slightly to KRW 89 –90 trillion as policy support persisted. In contrast, mid-sized exporters and manufacturing SMEs benefited from the export recovery, improved cash flow, and stable demand for working capital. Overall, the post2022 period has underscored a structural duality in Korea’s corporate finance system: while the banking sector successfully absorbed funding shocks and prevented a systemic liquidity crisis, the reallocation of credit towards large, investment-grade borrowers has left smal ler firms facing higher financing costs and reduced access. Strengthening the risk-based pricing fr amework, SME credit assessment tools, and policy-based guarantee efficiency will therefore remain crucial to restoring balanced credit growth and mitigating the lasting effects of the PF-market turbulence on SME lending cond itions.6 

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Figure 1. Lending to SMEs and large enterprises, 2003-2024

credit growth and mitigating the lasting effects of the PF-market turbulence on SME lending cond itions.6 

FINANCING SMES AND ENTREPRENEURS 2026: KOREA © OECD 2026

Figure 1. Lending to SMEs and large enterprises, 2003-2024 KRW Trillions

Source: Korea Federation of banks (KFB).

Credit conditions Between 2020 and 2024, Korea’s corporate lending environment shifted dramatically in respons e to one of the fastest monetary tightening cycles in the nation’s modern history. Following the pandemic-era easing phase, when the Bank of Korea (BOK) had lowered its base rate to a record low of 0.50% in mid-2020, the policy stance turned decisively restrictive from the second half of 2021 onward. The base rate, wh ich was 0.75% in August 2021, was raised in a series of consecutive steps, reaching 3.2 5% by December 2022 and further to 3.50% in early 2023, where it remained throughout 2024. This marked a cumulativ e 300basis-point tightening over roughly 18 months, implemented to curb inflation that had surged to over 5% in 2022 before moderating to around 3.6% in 2023 and 2.6% in 2024. As a result, interest rates on loans to both large corporations and small and medium-sized enterprises (SMEs) rose sharply, reflecting higher funding costs and tightened credit conditions. According to BOK data, the average lending rate for large corporations climbed from 2.74% in 2021 to 3.84% in 2022, 5.04% in 2023, and approximately 4.9% in 2024. Meanwhile, the average SME loan rate rose even more rapidly,

from 2.92% in 2021 to 4.13% in 2022, 5.31% in 2023, and stabilised around 5.0% in 2024. The sharp rise in both rates mirrored the central bank’s policy normalisation as well as elevated competition for credit, particularly as large enterprises shifted borrowing from the bond market to the banki ng sector amid wider credit spreads. Interestingly, the interest-rate spread between SME and large-corporate loans narrowed considerably over this period. After widening during 2015 –2018 and briefly contracting in 2019 –2020, the spread stood at 0.19 percentage points in 2021, expanded slightly to 0.29 percentage points in 2022, and then compressed again to 0.12 –0.10 percentage points by 2024. This near-convergence of corporate lending rates was driven by several structural factors. First, banks’ risk -based pricing frameworks increasingly reflected stronger collateral and guarantee coverage among SMEs, thanks to government c redit-guarantee schemes that mitigated credit-risk differentials. Second, heightened market risk prompted banks to reprice large-corporate loans upward, particularly for companies facing higher bond-market funding costs. Finally, macroprudential guidance encouraged balanced credit allocation between small and large borrowers, tempering the premium typically charged to SMEs. 7

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From a broader perspective, the Korean corporate credit market since 2022 has displayed a paradoxical pattern: while borrowing costs have risen for all firms, the traditional r ate gap between small and large companies has almost disappeared. This suggests that banks have prioritised portfolio risk management and liquidity preservation over aggressive SME lending expansion. Although the narrowing spread might appear favourable, it in fact reflects compressed credit differentiation, where both SMEs and large enterprises face similarly high borrowing costs. For smaller firms with thinner profit mar gins, this uniform rise in financing costs represents a heavier real burden, underscoring the i mportance of targeted policy

appear favourable, it in fact reflects compressed credit differentiation, where both SMEs and large enterprises face similarly high borrowing costs. For smaller firms with thinner profit mar gins, this uniform rise in financing costs represents a heavier real burden, underscoring the i mportance of targeted policy lending, credit-guarantee efficiency, and sustained financial support for SME liquidity in the current highrate environment. Figure 2. Loan interest rate on loans for SMEs and large firms in Korea, 20092024

Source: Bank of Korea(BOK).

Alternative sources of SME financing Korea’s venture investment market, which had expanded rapidly during the pandemic y ears, entered a normalisation phase between 2022 and 2024 as monetary conditions tightened and i nvestor sentiment cooled. After reaching KRW 4.30 trillion in 2020, the market surged to a record KRW 7.68 trillion in 2021, representing a 78.4% year-on-year increase, the largest in Korea’s venture history. However, as the Bank of Korea began a rapid rate-hike cycle in late 2021, the momentum faded. Venture investment fell to KRW 6.76 trillion in 2022 ( –11.9%) and further declined to KRW 5.40 trillion in 2023 ( –20.2%), before showing early signs of recovery in 2024, when total venture investment amounted to approximatel y KRW 6.63 trillion, marking a 22.9% rebound from the previous year (MSS & KVCA, Venture Investment Trends 2025). The contraction in 2022–2023 was mainly driven by rising interest rates, inflation, and valuation corrections in the technology sector, while the subsequent recovery in 2024 reflected improved risk appetite amid monetary-policy stabilisation. Notably, the decline in Korea was less severe than in major gl obal markets; venture investment fell by over 35% in the U.S. and 40% in Israel during the same period, underscoring the relative resilience of Korea’s VC ecosystem. Despite reduced deal volume , the Korean m arket

venture investment fell by over 35% in the U.S. and 40% in Israel during the same period, underscoring the relative resilience of Korea’s VC ecosystem. Despite reduced deal volume , the Korean m arket remained active in seed and early-stage investments, sustained by domestic insti tutional investors and public venture funds, including the Korea Venture Investment Corp. (KVIC) fundof-funds programme.8 

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By industry, investment concentration persisted in three key areas (ICT services, bio/medical, and distribution/services)which together accounted for roughly 71% of total investments in 2024. The ICT services sector attracted about KRW 2.25 trillion (35.5%), supported by renewed funding in artificial intelligence (AI), digital content, and cloud platforms. The bio/medical s ector, despite volatile valuations, received around KRW 1.02 trillion (16%), as investor sentiment began to stabilise following the shar p correction of 2022–2023. Meanwhile, green technology, secondary batteries, and mobility-related startups emerged as new growth engines, collectively representing more than KRW 900 bil lion (14%) of total venture investments in 2024, three times their 2020 level. This diversification suggests a gradual shift from pure ICT-driven growth towards cross-sectoral innovation aligned with Korea’s green and digital transition policies. By investment stage, the market exhibited a marked tilt towards early-stage funding. Investments in earlystage firms (under 3 years old) reached a record KRW 2.17 trillion in 2024, a 5.8% year-on-year increase, surpassing the KRW 2 trillion threshold for a third consecutive year. Mid-stage (3 –7 years) and late-stage (over 7 years) firms, however, saw declines of 8.3% and 12.1%, respectively, as inves tors sought lower valuations and greater upside potential in seed-stage ventures. The average deal size fell modestly, but

(over 7 years) firms, however, saw declines of 8.3% and 12.1%, respectively, as inves tors sought lower valuations and greater upside potential in seed-stage ventures. The average deal size fell modestly, but the number of transactions increased by nearly 9%, reflecting a more cautious y et selective investment climate. Geographically, Seoul and Gyeonggi Province continued to dominate the venture lan dscape, attracting about 76% of total investments, though regional ecosystems such as Busan, Daejeon, and Gwangju expanded their shares through local government-led accelerator programmes. Public pa rticipation remained significant: government-linked venture funds accounted for roughly 35% of total VC commitments in 2024, emphasising the policy-driven nature of Korea’s venture market. Overall, the 2022 –2024 cycle demonstrated both the sensitivity and resilience of Korea’s venture ecosystem. While the surge in interest rates initially dampened liquidity and valuations, the stabilisation of financial markets and structural policy support have set the stage for a gradual recovery . The 2024 rebound, led by AI, semiconductors, mobility, and green technologies, signifies a mat uring venture environment increasingly aligned with Korea’s long-term innovation and sustainability agenda. Table 3 . Venture and growth capital in Korea KRW billion Stage 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Early 369.9 504.5 647.2 790.9 779.6 981 1 390.1 1 320.5 1 859.8 2005 1 327 1 263.3

Expansion 325.9 406.9 582.8 615.6 664.1 1 193.5 1 766.2 1726.8 3 481.4 2 730.5 2 032 2 311.9 Later 688.7