The Reality of Investment for Korean Female Entrepreneurs: A More Severe Gap Than Expected
Editor
I read an interesting article today in the Women’s Economy Newspaper. It was about the reality of investment for Korean female entrepreneurs. While such gender gap discussions are quite common overseas, it was the first time I saw it analyzed with domestic data, which piqued my interest. However, upon reviewing the content, it was much more severe than I had anticipated.
According to the article, a study found that the average investment scale received by Korean female entrepreneurs is significantly lower than that of male entrepreneurs. Specifically, the average investment amount for female entrepreneurs is about 60% of what male entrepreneurs receive. This made me wonder whether this is simply due to differences in the fields of entrepreneurship or if there are other structural issues at play.
Personally, I think the reasons for such a gap are likely multifaceted. First, if we look at the gender composition of the investor pool itself, the proportion of women in decision-making positions within Korea’s venture capital or accelerators is quite low. Statistics from 2024 show that the proportion of women among partner-level personnel in major domestic VCs is around 15%. In such an environment, there are bound to be limitations in understanding and evaluating the business ideas or approaches of female entrepreneurs.
More importantly, this gap is not merely an issue of ‘fairness.’ In fact, overseas studies show that companies founded by women often have a higher return on investment (ROI) compared to those founded by men. A 2018 study by the Boston Consulting Group revealed that while the investment amount received by female entrepreneurs is half that of their male counterparts, their revenue performance is 10% higher. In terms of investment efficiency, it is a situation where more opportunities should be given to female entrepreneurs.
Structural Issues in the Korean Startup Ecosystem
Looking more closely at this issue, several characteristics of the Korean startup ecosystem become apparent. First, the weight of ‘networking’ in the investment decision process is quite significant. Venture investment in Korea still relies heavily on deal sourcing through connections and recommendations, which puts female entrepreneurs at a disadvantage as they find it difficult to access the existing male-dominated networks.
In fact, if you look at major domestic startup communities or gatherings, the proportion of male participants is still overwhelmingly high. For example, even at prominent domestic startup events like ‘COMEUP’ or ‘Venture Square,’ the proportion of female entrepreneurs or investors is only around 20-30%. In such an environment, female entrepreneurs naturally have limited opportunities to meet with investors.
Another point to note is the concentration of investment in certain fields. Venture investment in Korea is still focused on technology-centric fields like IT, bio, and fintech, which are traditionally male-dominated areas, leading to a structural issue where male entrepreneurs receive more investment. On the other hand, fields where female entrepreneurs are relatively more active, such as fashion, beauty, childcare, and education, tend to have smaller investment scales.
However, it is questionable whether this field-specific concentration is truly rational. For example, the growth of the domestic K-beauty market has reached about 8 trillion won as of 2023, with overseas exports exceeding 10 billion dollars annually. Even looking at the performance of large companies like Amorepacific (090430:KR) or LG Household & Health Care (051900:KR), the growth potential in this field is clear, yet investment in startups in this area remains relatively passive.
Global Trends and Korea’s Current Status
Looking at overseas cases, various efforts are being made to reduce this gender investment gap. In the United States, the number of investment funds exclusively for female entrepreneurs has increased sharply since 2020, with about 17% of total venture investment going to female entrepreneurs by 2023. Although this is still far from a 50:50 ratio, considering it was around 5% in the early 2010s, it is a significant improvement.
Europe is more proactive. In Germany, the government operates support programs for female entrepreneurs, inducing private investment through investment matching funds. France also mandated the submission of gender diversity reports for investment portfolios for VC funds above a certain size starting in 2022. These policy interventions seem to be showing actual effects.
In contrast, Korea still lacks such systematic approaches. Although the Ministry of SMEs and Startups is running support projects for female entrepreneurs, most are limited to initial startup support, with no specific policy support in the more advanced investment stages like Series A. In such a situation, no matter how much support is received initially, difficulties in securing investment during the scale-up stage are inevitable.
Especially in Korea, due to the large corporation-centered economic structure, collaboration or mergers and acquisitions (M&A) with large corporations are crucial for startup growth. In this process, networking and existing relationships play an important role. Looking at the venture investment divisions or accelerator programs of large corporations like Samsung Electronics (005930:KR), Naver (035420:KR), or Kakao (035720:KR), the male-dominated culture is still strong, according to industry evaluations.
However, there are signs of change recently. For example, Kakao Ventures and Naver D2SF have started operating separate support programs for female entrepreneurs, and some VCs have publicly announced plans to consider gender diversity in their investment evaluation processes. Although many still remain at a declarative level, at least the awareness of the issue seems to be shared.
Personally, I view these changes not as mere ‘political correctness’ but as actual business necessities. As the growth engine of the Korean economy shifts from manufacturing to services, and from B2B to B2C, the ability to accurately grasp and respond to consumer needs is becoming increasingly important. From this perspective, the market insight and consumer understanding possessed by female entrepreneurs can certainly be a competitive advantage.
In fact, looking at successful female entrepreneurs in Korea, many have accurately captured niche or unmet needs in the existing market. For example, in the beauty app sector, services created by female entrepreneurs have achieved great success by providing user experiences that male developers had not considered. Observing these cases, it seems that investors are increasingly focusing on market opportunities and execution capabilities rather than gender.
Of course, such changes cannot happen overnight. The culture within the investment industry itself needs to change, and female entrepreneurs must either adapt to the existing male-dominated pitching style and networking culture or create new methods. However, in the long run, I believe this diversity will enhance the overall competitiveness of the Korean startup ecosystem. Ultimately, an environment where more diverse perspectives and ideas compete will lead to more innovative outcomes.
This article was written after reading the Untitled article, adding personal opinions and analysis.
Disclaimer: This blog is not a news outlet, and the content is the author’s personal opinion. Responsibility for investment decisions lies with the investor, and no responsibility is taken for investment losses based on the content of this article.
