1.3 Trillion KRW Committed to the Korea Fund of Funds... 2.5 Trillion KRW Venture Fund Established

The Ministry of SMEs and Startups Invests a Total of 900 Billion KRW to Establish a 1.9 Trillion KRW Venture Fund

[Asia Economy Reporter Kim Cheol-hyun] The Ministry of SMEs and Startups (Minister Park Young-sun) and Korea Venture Investment Corp. (CEO Lee Young-min) announced on the 12th that this year, 10 ministries will invest a total of 1.2975 trillion KRW in venture funds, including a record-high budget of 1.1065 trillion KRW and 191 billion KRW in recovered funds. Through this, they plan to create venture funds totaling more than 2.5 trillion KRW.

This reflects the government's intention to act as a catalyst to continuously sustain the enthusiasm for venture investment, which set a record last year with 4.3 trillion KRW. This time, the investment details for 1.208 trillion KRW out of the total 1.2975 trillion KRW will be announced, and 89.5 billion KRW will be separately announced after March.

This year, the Ministry of SMEs and Startups will invest 900 billion KRW, composed of a record-high main budget of 800 billion KRW and 100 billion KRW in recovered funds, to create venture funds worth 1.87 trillion KRW. They will invest 520 billion KRW in startup funds supporting the founding stage of innovative companies to create funds worth 920 billion KRW, and to strengthen the scale-up area supporting post-startup growth, they plan to invest 380 billion KRW in jump-up funds supporting the leap stage of innovative companies to create funds worth 950 billion KRW.

Key features include the large-scale creation of early-stage startup funds (480 billion KRW) and youth startup funds (110 billion KRW). For early-stage companies, which carry relatively high investment risks, the government plans to play an active patron role to expand investment opportunities. Also, materials, parts, and equipment funds will be created for the first time at a scale of 110 billion KRW. Of this, 60 billion KRW will be raised as a project fund where venture capitalists secure investment targets in advance and then form the fund. The remaining 50 billion KRW will be in a general fund form. Notably, the funds created this time will have mandatory screening conditions to focus investments on promising companies selected by the government, such as 'SoBuJang (Materials, Parts, and Equipment) Strong Small and Medium Enterprises 100' and 'SoBuJang Startup 100.'

A regulatory sandbox fund will also be newly introduced at a scale of 50 billion KRW. It will focus investments on companies granted regulatory exemptions and include companies operating designated industries within regulatory free zones. An R&D matching fund will be introduced for the first time at a scale of 50 billion KRW. It will operate by matching 1:1 under the same conditions for R&D-performing companies discovered and invested in by venture capitalists. Support for investment blind spots will continue through the creation of funds for women (20 billion KRW), local regions (35 billion KRW), social impact (35 billion KRW), and technology holding companies (30 billion KRW). The jump-up fund supporting the leap stage of innovative companies will be divided into two stages by scale: the first stage will be about 70 billion KRW per fund, and the second stage will be created at a scale of 120 billion KRW or more.

The mother fund has played a catalytic role in attracting private capital to venture investment since its launch in 2005, raising a total of 24.8617 trillion KRW over 15 years and investing 18.1753 trillion KRW in 6,035 startup and venture companies. In particular, the large-scale supplementary budget of 800 billion KRW immediately after the government's launch in 2017 played an important role in achieving the record-high venture investment of 4.3 trillion KRW last year. A Ministry of SMEs and Startups official said, "The 2.5 trillion KRW scale venture funds supplied through the mother fund this year will contribute to sustaining the recent growth momentum of venture investment," adding, "With the jump-up fund being fully established from this year, we expect to create success stories such as the birth of additional unicorn companies."

This content was produced with the assistance of AI translation services.