Government to Invest 750 Billion KRW in Next Year's Mothae Fund

Formation of a 1.6 Trillion Won Venture Fund to Provide Seed Money for the Venture Investment Market

[Asia Economy Reporter Kim Jong-hwa] The establishment of a 1.6 trillion KRW scale mother fund to support the Smart Korea Fund and regional New Deal venture funds has been launched in earnest. On the 16th, the Ministry of SMEs and Startups announced that it would conduct the 'Mother Fund 2021 1st Regular Investment Project' with Korea Venture Investment.

The Ministry plans to invest a total of 750 billion KRW out of the 800 billion KRW budget for the 2021 mother fund investment project to create venture funds totaling more than 1.6 trillion KRW. The venture funds supplied this time are expected to begin investing in startups and ventures as early as February next year.

By major investment sectors, the 'Smart Korea Fund' to promote the 'Korean New Deal' plans to raise a total of 60 trillion KRW by 2025. Next year, it will invest 3.5 trillion KRW in the first regular investment to raise 900 billion KRW and plans to raise a total of 1 trillion KRW including 100 billion KRW through the second regular investment project. The Smart Korea Fund was raised to 1.3 trillion KRW this year, far exceeding the initial target of 1 trillion KRW.

The 'Regional New Deal Venture Fund,' which involves regional public institutions, will also be recruited. It is the only source of funding to promote the 'Regional Balanced New Deal' and foster regional innovative companies, with participation from regional public institutions and local governments to be raised by region.

The mother fund, regional public institutions, and local governments will participate to create a mother fund (directly managed by Korea Venture Investment), and through this, the 'Regional New Deal Venture Fund (sub-fund)' will be established to invest in regional innovative companies, companies within regulatory free zones, and promising small and venture companies in key industries.

Next year, the project aims to cover four regions nationwide and plans to expand further depending on demand. On the 11th, Korea Venture Investment, the Korea Technology Finance Corporation, and Busan City signed a business agreement to pilot the first Regional New Deal Venture Fund with a scale of 100 billion KRW in Busan, marking the first step.

Additionally, investment funds will be reinforced in vulnerable sectors such as performance, travel, and tourism due to the prolonged COVID-19 pandemic, as well as in early-stage startups to leap forward as an innovative startup nation.

To foster innovative growth industries, a DNA·BIG3 Fund worth 100 billion KRW will be established to invest in innovative infrastructure known as D.N.A (Data, Network (5G), AI) and three major new industries (BIG3): system semiconductors, bio-health, and future cars. This fund will especially focus on companies entering the growth stage after startup.

Furthermore, a scale-up fund of 250 billion KRW will be created to nurture innovative companies entering the growth stage into unicorn companies, and a materials, parts, and equipment fund of 100 billion KRW will be established to focus investment on excellent companies such as 100 small and strong companies in materials, parts, and equipment and 100 startups.

Yang Seung-wook, head of the Venture Investment Division at the Ministry of SMEs and Startups, said, "Although venture investment performance was sluggish in the first half of this year due to reduced face-to-face opportunities caused by COVID-19, it dramatically rebounded in the third quarter thanks to the bold catalytic role of the mother fund, including supplementary budgets," adding, "We will create an opportunity to revitalize the venture investment market through early promotion of the 2021 mother fund investment project and rapid fund supply."

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