Busan City Forms 100 Billion Won Fund to Foster 'Unicorn Companies'

Venture Fund Launches with 100.8 Billion KRW Investment... Government Selects 'Korea Mother Fund Public Offering'
Plans to Operate Investment Pools in 4 Sectors Including Strategic Industries and New Technologies for 8 Years

Details of the 2020 Investment Project Fund promoted by Busan City.

[Asia Economy Yeongnam Reporting Headquarters, Reporter Kim Yong-woo] Busan City has created the largest-ever fund exceeding 100 billion KRW to invest in startups and ventures.

Busan City announced on the 5th that it has established a fund of 100.86 billion KRW and will begin full-scale investments. The fund comprises 55.5 billion KRW in national funds, 8.25 billion KRW in city funds, and 37.11 billion KRW in private investments.

The newly established fund consists of four funds selected in April under the government’s ‘Korea Fund of Funds 2020 1st Regular Capital Contribution Project.’

By sector, these are the startup early-stage fund ‘WE Early-stage Enterprise Fund No.1,’ the tourism enterprise development fund ‘K-Bridge Tourism Industry Level-up Investment Association,’ the ICT industry fund ‘BNK Regional Balanced Growth Investment Association,’ and the individual investment association fund ‘Zephyrus Lab Individual Investment Association No.1.’

Investment associations headquartered or with branches in Busan will conduct venture company discovery and investment in Busan over eight years, with four years of investment and four years of recovery.

The city actively led the formation of region-centered investment associations to foster startups and venture companies. The formation of these four selected funds secured an unprecedented amount of investment resources, totaling 92.6 billion KRW, which is 11.2 times the city’s contribution of 8.25 billion KRW, from national and private sources.

Starting with the ‘K-Bridge Tourism Industry Level-up Investment Association’ to be formed on August 6, the remaining funds are expected to be formed one after another.

Following initial investments, subsequent investments will be made to actively resolve the issues of investment neglect and capital outflow to the Seoul metropolitan area for local companies. Furthermore, it is expected to serve as a catalyst for the birth of ‘Busan-origin unicorn companies’ through active investment attraction and growth.

The largest fund among these, WE Early-stage Enterprise Fund No.1 (57.6 billion KRW), is managed by We Ventures, a startup investment company headquartered in Seoul. The Korea Fund of Funds contributed 30 billion KRW, Busan City 2 billion KRW, and financial institutions 25.6 billion KRW as partners.

We Ventures identified intelligent information service industries and life care industries as innovative growth sectors among Busan’s strategic industries. It is particularly interested in foundational technology sectors that can enhance competitiveness through convergence with Busan’s existing core industries and fields such as artificial intelligence (AI), big data, and the Internet of Things (IoT).

They plan to invest more than 60% of the committed amount in early-stage startups with high growth potential in key recent keywords such as Untact, On-line, Bio, On-demand, and Health care. To focus on discovering and investing in promising startups and ventures, they plan to open a Busan branch in the second half of the year.

The K-Bridge Tourism Industry Level-up Investment Association (21.72 billion KRW) includes contributions of 14.5 billion KRW from the Korea Fund of Funds, 5 billion KRW from Busan City, and 2.22 billion KRW from financial institutions.

K-Bridge Investment, the management company, is a Busan-based startup investment firm established in 2016. It invests in tourism companies and projects, recognizing the potential for expansion in Busan’s tourism industry.

They plan to invest more than 65% of the committed amount in small and venture companies and related projects in the tourism industry. They aim to foster new types of tourism companies that align with the New-normal era by integrating tourism infrastructure and Hallyu (Korean Wave) tourism sectors.

The BNK Regional Balanced Growth Investment Association (16.54 billion KRW), managed by BNK Venture Investment of BNK Financial Group, a leading financial institution in the Busan-Ulsan-Gyeongnam region, includes contributions of 8 billion KRW from the Korea Fund of Funds, 750 million KRW from Busan City, and 7.79 billion KRW from financial institutions including Busan Bank.

BNK Venture Investment, based on government and local government policy directions, utilizes a rich regional industrial network and has set information and communication technologies such as artificial intelligence (AI), Internet of Things (IoT), and virtual/augmented reality (VR/AR) in the intelligent information service industry as major investment fields among Busan’s strategic industries.

The ‘Individual Investment Association’ sector of the Korea Fund of Funds capital contribution public offering project started in 2019. Zephyrus Lab Individual Investment Association No.1 (5 billion KRW) is the first individual investment association formed in Busan, making it highly significant.

The Korea Fund of Funds contributed 3 billion KRW, Busan City 500 million KRW, and financial institutions 1.5 billion KRW. Accelerator Zephyrus Lab, headquartered in Busan, manages the fund and has established investment strategies in marine, fisheries, tourism, smart factories, artificial intelligence, next-generation transportation, renewable energy, healthcare, and fintech sectors.

They plan to concentrate more than 60% of the committed amount on early-stage startups located in Busan. For startups seeking follow-up investments, which typically require relatively small investment amounts, they plan to link investments with WE Early-stage Enterprise Fund No.1, K-Bridge Tourism Industry Level-up Investment Association, and BNK Regional Balanced Growth Investment Association formed concurrently to reduce investment gaps.

Byun Sung-wan, Acting Mayor of Busan, said, “Starting with the formation of this 100 billion KRW scale fund, we will focus investments on Busan’s strategic industries and new technologies for future generations to overcome the growth limitations centered on traditional manufacturing industries.”

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