AI Unicorns Fuel Korea Listing Surge

A wave of innovative South Korean artificial intelligence (AI) startups is increasingly looking towards domestic stock market listings, igniting anticipation for a significant homegrown AI industry boom.

Leading this trend is Rebellions, recognized as South Korea’s pioneering AI semiconductor unicorn. The company is poised to submit its preliminary approval application in August, following the closure of its first-half financial records. Samsung Securities and Korea Investment & Securities have been selected as the primary underwriters for its eagerly awaited initial public offering (IPO).

While many tech startups traditionally opt for the Kosdaq, leveraging its special listing track which prioritizes technological innovation over stringent financial metrics, Rebellions is notably set to pursue a listing on the benchmark Kospi exchange.

This strategic decision is underpinned by Rebellions’ substantially improved financial performance. The company has demonstrated a robust upward revenue trajectory, climbing from 2.74 billion won ($1.8 million) in 2023 to a consolidated 10.3 billion won in 2024. This growth was significantly boosted by its merger with Sapeon Korea, an AI chip spinoff from SK Telecom, with total revenues exceeding 27 billion won last year.

With a recent successful pre-IPO funding round securing 640 billion won, industry observers anticipate a shortened timeline for Rebellions’ market debut.

Despite previous indications of a potential listing on the US tech-heavy Nasdaq exchange, Rebellions is now expected to prioritize a domestic IPO. The company may then explore alternative avenues for US market exposure, such as listing American Depositary Receipts (ADRs), a strategy successfully employed by Korean chip giant SK hynix.

“Regarding the decision between listing in Korea or the US, I believe pursuing both markets is the optimal strategy,” stated CEO Park Sung-hyun at a December press event.

He further elaborated, “From a timeline perspective, a domestic listing should be our initial step. Concurrently, a significant number of companies in Korea have already adopted dual listing strategies.”

Another prominent local AI startup, Upstage, is also preparing for a domestic listing, with plans to file its application within the current year. KB Securities and Mirae Asset Securities have been appointed as its lead underwriters.

Upstage’s strategic acquisition of AXZ, the operator of Daum, aims to leverage Daum’s extensive trove of Korean-language data. This move is crucial for strengthening Upstage’s proprietary large language model, Solar, and is anticipated to significantly enhance its market valuation. Reports indicate the startup is targeting an ambitious valuation of 2 trillion to 4 trillion won through its upcoming IPO.

While high-profile Korean startups historically pursued higher valuations on Wall Street, following the paths of giants like e-commerce leader Coupang and Naver’s Webtoon Entertainment, a distinct shift in trend is now evident. Improved valuations within the local stock market, partly due to the easing of the ‘Korea discount,’ are making domestic listings increasingly attractive.

An official from a local brokerage firm commented, “Previously, tech-driven companies often sought US market debuts, primarily citing more favorable valuations. However, the recently enhanced local market environment is clearly influencing a change in this trend.”

Adding further impetus to this shift is the South Korean government’s proactive drive to bolster the nation’s AI competitiveness. This includes significant large-scale policy financing initiatives designed to support the burgeoning sector.

Over the next five years, the government plans to allocate an impressive total of 50 trillion won towards critical AI and semiconductor sectors through various comprehensive funding programs. A substantial 10 trillion won of this amount is earmarked for investment in the current year alone.

With numerous local AI startups poised to significantly benefit from these robust funding schemes, the allure of overseas IPOs may consequently diminish.

“There is a growing market sentiment that it is inappropriate for companies that have primarily developed and thrived in Korea to seek overseas listings, a sentiment further reinforced by their receipt of substantial domestic policy funding,” explained an official from a local firm currently contemplating an IPO.

Beyond these prominent players, other innovative AI startups are also actively evaluating domestic IPOs as they strategically secure pre-IPO funding.

Furiosa AI, a pioneering startup dedicated to AI semiconductors, is currently in the process of raising 750 billion won from investors. This is widely considered its final funding round before an anticipated IPO. With an estimated valuation exceeding 2 trillion won, the company aims for its market debut in 2027.

Similarly, DeepX, an innovator in edge AI chip development, is also pursuing a domestic public offering. Despite keen interest from US exchange operators who saw high valuation potential for a US listing, CEO Lokwon Kim has firmly stated the startup’s intention to list in Korea.

DeepX is presently focused on securing strategic investment from the National Growth Fund. While an IPO underwriter is yet to be appointed, the company confidently anticipates raising over 600 billion won in pre-IPO funding.

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