Last Year, Venture Funds Raised 6.6 Trillion Won... 'Largest Scale Ever'

Increase of 2.3243 trillion KRW from 4.2433 trillion KRW in 2019
Significant rise in private and policy institution investments driven by the Motae Fund

The Ministry of SMEs and Startups announced on the 14th that, based on an analysis of last year's venture fund formation performance, the formation of venture funds surpassed 6 trillion won for the first time last year, reaching a record high of 6.5676 trillion won. Photo by Asia Economy DB

[Asia Economy Reporter Kim Heeyoon] It has been revealed that venture funds newly established last year recorded the highest performance ever. In particular, while the proportion of contributions from the Korea Venture Investment Corp. (K-VIC) decreased, the amount of private and policy institution investments driven by K-VIC significantly increased, confirming that K-VIC played a crucial role as a catalyst in the venture investment market.

The Ministry of SMEs and Startups (Minister Park Young-sun, hereinafter referred to as the Ministry) announced on the 14th that an analysis of last year's venture fund formation performance showed that venture fund formation exceeded 6 trillion KRW for the first time last year, reaching a record high of 6.5676 trillion KRW.

Last year's performance surpassed the previous record of 4.847 trillion KRW set in 2018, marking the highest formation amount ever.

Looking at the quarterly data, fund formation performance, which had slowed in the first and second quarters of last year, began to increase by about 49.5% in the third quarter compared to the previous year, and in the fourth quarter alone, 3.6946 trillion KRW was formed, an increase of about 111.1% compared to 2019. Especially in the fourth quarter, fund formation increased by about 118.9% compared to the previous third quarter, recording a higher fund formation performance than the cumulative 2.873 trillion KRW of the third quarter, leading the overall increase in fund formation performance.

The Ministry explained that the sharp increase in fund formation in the third and fourth quarters was due to the formation of funds such as the Smart Korea Fund and the Materials, Parts, and Equipment Fund, which were announced for investment in August last year with an additional budget of 200 billion KRW, starting in the third quarter.

Trends in Venture Fund Formation Over the Past 5 Years and Quarterly Formation Last Year. Graph = Provided by the Ministry of SMEs and Startups

The status of investors in newly formed funds was identified as approximately 2.2465 trillion KRW from policy finance sectors such as K-VIC, and 4.3211 trillion KRW from the private sector. In the policy finance investment sector, contributions significantly increased with 357 billion KRW from K-VIC and 315.7 billion KRW from other policy institutions such as the Korea Development Bank and government funds, resulting in a 60.5% increase of about 846.6 billion KRW compared to the previous year. Private sector investments turned to an upward trend from the third quarter due to increased contributions from policy institutions and others, increasing by about 52.0% compared to 2019.

The proportion of K-VIC sub-funds relative to total fund formation decreased by 0.3 percentage points. Instead, the amount of private and policy institution investments driven by K-VIC increased by 772.9 billion KRW, showing that K-VIC played a catalytic role in the venture investment market. Last year, the amount of K-VIC sub-fund formation was 3.232 trillion KRW, accounting for about 49.2% of the total fund formation amount. In particular, the scale of K-VIC contributions formed last year was about 1.2 trillion KRW, the highest ever, and the amount of private and policy institution investments driven by K-VIC sub-funds increased by 772.9 billion KRW compared to 2019, reaching 2.016 trillion KRW.

The trend toward larger funds was also confirmed due to projects such as the K-Unicorn Project and the Scale-up Fund. Last year, the number of funds formed with over 100 billion KRW significantly increased to 15, compared to 6 in 2019, accounting for about 7.3% of the total 206 associations. The total amount raised by the top 10 newly formed funds last year was 2.2041 trillion KRW, accounting for 33.6% of the total formation amount. Among them, the largest fund was the "Atinum Growth Investment Association 2020," formed with 466.9 billion KRW, which is about 110 billion KRW larger than the previous largest fund (about 350 billion KRW, Atinum).

Additionally, following the enactment and enforcement of the Venture Investment Act on August 12 last year, it became possible for startup planners to form venture funds, and 11 venture funds managed by startup planners were formed for the first time.

Park Yong-soon, Director of Venture Innovation Policy at the Ministry, said, "It is very encouraging that venture funds surpassed 6 trillion KRW for the first time ever last year, achieving the highest formation performance, and especially meaningful that while the proportion of K-VIC decreased, it led large-scale investments from other private and policy institutions, expanding investment capacity," adding, "The expanded venture funds will revitalize the venture investment market, which had been sluggish due to COVID-19, and contribute to the recovery and leap forward of our economy from COVID-19."

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