Once-booming venture companies in
Korea are going through a bitter trial in less than a year
since they started to receive the market's spotlight.
SEOUL, 23 May 2000 (Asia Pulse) - The KOSDAQ index, which once soared, has plunged to the same
level it was at the start of November last year.
The large numbers of investors who rushed to venture
companies have dwindled.
Individual investors invested about two trillion won (US$1.8
billion) into venture enterprises in the first quarter of this
year, but more than half of the funds have streamed out of
venture businesses since then.
Since the end of April when the venture investment boom
started to shrink, some angel clubs have not attracted any
investments at all.
Koreans are estimated to have about one million Web domain
names, which is the second largest number next to the United
There are over 6,000 registered venture firms in Korea and
30 to 40 percent of them are information technology venture
companies, or so-called "dot coms".
Internet venture companies which are not officially
registered as such are also estimated to be over 3,000.
Although many Internet companies drew close to the heart of
Korea's economy in a short period, many specialists and the
press are currently calling the dot com boom a "bubble".
Trade Professor Lee Jong-yun of Hankuk University of Foreign
Studies said most of the existing Internet companies will go
"Too large a portion of limited resources is biased toward
Internet business, blocking development of manufacturing," Lee
Kim Dong-hoon, vice president of Korea CALS/EC Association,
predicted that online only companies will not survive if
offline companies expand into the sector.
Many economic specialists, however, say the recent recession
in Internet business does not mean the end of the dot com
"Recent disputes over dot com companies will contribute to
sorting gems from stones," Yoon Jong-eun of the Samsung
Economic Research Institute said.
"Dot coms cannot but keep going forward in the future since
they are a mega trend," he said.