Selection of 25 Trillion KRW Venture Fund in the 1st Round of Motefund Investment Project

Source=Ministry of SMEs and Startups

[Asia Economy Reporter Kim Daeseop] The Ministry of SMEs and Startups announced on the 28th that it has completed the 'selection of sub-funds for the first round of the 2020 Korea Fund of Funds (KFoF) investment project' in collaboration with related ministries.

The selection of sub-funds for this KFoF involved the Ministry of SMEs and Startups, Ministry of Culture, Sports and Tourism, Ministry of Science and ICT, Ministry of Environment, Ministry of Education, Ministry of Land, Infrastructure and Transport, Ministry of Oceans and Fisheries, and Ministry of Employment and Labor. The first round invested 1.0841 trillion KRW to select 81 funds with a total venture fund size of 2.4798 trillion KRW.

This amount corresponds to 112% of the original target of 2.2225 trillion KRW and already surpasses the 2.413 trillion KRW selected by the KFoF throughout last year. Additionally, four large-scale funds exceeding 100 billion KRW, capable of supplying substantial capital for follow-up growth stages after the startup phase, were raised totaling 586 billion KRW.

The funds selected this time are the first to apply the 'Venture Investment Promotion System' announced at the 4th Emergency Economic Meeting on the 8th. The Ministry of SMEs and Startups expects these funds to help recover investment sentiment, which has been somewhat subdued due to the spread of COVID-19.

If more than 20% of the fund formation amount is invested by the end of this year, the KFoF will prioritize covering investment losses. Incentives such as an additional 10% share of KFoF profits to fund managers and preferential management fees will also be provided. Furthermore, fund managers can utilize fast closing, which allows funds to be formed and investments to begin once 70% of the fund formation amount is secured.

The Ministry of SMEs and Startups selected 38 funds totaling 745.1 billion KRW for the startup sector and 13 funds totaling 1.2725 trillion KRW for the jump-up sector. The startup sector consists of early-stage startup funds of 461.4 billion KRW, youth startup funds of 111.2 billion KRW, and materials, parts, and equipment funds of 50 billion KRW, among others.

The jump-up sector, introduced for the first time this year, secured private capital exceeding the original target of 950 billion KRW by 322.5 billion KRW, ensuring financial efficiency. The materials, parts, and equipment fund, despite being the first fund established with a separate account within the KFoF, recorded a competition rate of 10.9 to 1, the highest among all sectors in the first regular project.

The Ministry of Culture, Sports and Tourism oversees the formation of 17 funds totaling 336.4 billion KRW in the fields of cultural content, film, tourism, and sports. Content-specialized funds such as game, animation, adventure content, and Korean film selected 13 funds totaling 283.2 billion KRW. Tourism funds aimed at investing in tourism venture companies and projects selected 3 funds totaling 43.2 billion KRW.

The Ministry of Science and ICT selected two digital content funds totaling 32.1 billion KRW, targeting early investment and growth support for small and venture companies in immersive content fields such as virtual reality (VR), augmented reality (AR), and holograms, which are key services in the 5G era and have growth potential in the post-COVID-19 non-face-to-face economy and society.

Led by the Ministry of Environment, two funds totaling 35.4 billion KRW will be formed to invest in future innovative green technologies and industries, as well as environmental sectors such as fine dust emission reduction. The Ministry of Oceans and Fisheries plans to form a total of two funds worth approximately 30 billion KRW this year, including one fund of 15.5 billion KRW selected this time, investing in new marine industries such as advanced marine equipment, marine leisure tourism, and smart maritime logistics.

The Ministry of Land, Infrastructure and Transport will form one fund worth 17 billion KRW to invest in small and venture companies related to land, architecture, roads, and logistics. The Ministry of Education selected six university startup funds totaling 20 billion KRW to support university-originated startups by professors and graduate students. The Ministry of Employment and Labor selected one social enterprise fund worth 5.8 billion KRW to invest in (preliminary) social enterprises and other social economy companies.

The Ministry of SMEs and Startups expects the venture investment promotion system, including priority loss coverage, which is fully applied from the funds selected this time, to play a key role in reversing the somewhat subdued investment sentiment caused by COVID-19. To support the venture investment market, the second round of KFoF investment projects will continue. Five ministries ? the Korean Intellectual Property Office, Ministry of Health and Welfare, Ministry of Culture, Sports and Tourism, Ministry of Oceans and Fisheries, and Ministry of Science and ICT ? will invest 83.5 billion KRW aiming to form 330 billion KRW.

Lee Young-min, CEO of Korea Venture Investment Corp., said, "The sector funds in various fields such as cultural content, immersive content, environment, marine, land, and tourism being formed this time are expected to add diversity to our industry in the changing environment after COVID-19 and contribute to creating future growth engines in multiple areas."

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