[2021 National Audit] The 'Second Venture Boom' is a Seoul Metropolitan Venture Boom... "Poor Venture Investment Performance in Provinces"

Local Funds Account for 3.2% of Total Mother Funds
Investment Companies and Amounts Increasingly Concentrated in the Capital Region

Minister Kwon Chil-seung of the Ministry of SMEs and Startups held a meeting with young startup CEOs who received the '2021 Forbes Asia 30 Under 30' and 'CES 2021 Innovation Award' at Tipstown in Gangnam-gu, Seoul, last June. Photo by the Ministry of SMEs and Startups

[Asia Economy Reporter Kim Heeyoon] Although the second venture boom is spreading, it has been revealed that venture companies outside the Seoul metropolitan area have hardly benefited from investment activation.

According to data on the mother fund received by Kim Jeong-ho, a member of the National Assembly's Industry, Trade, Energy, Small and Medium Venture Business Committee from the Ministry of SMEs and Startups on the 7th, the proportion of local funds compared to the total fund slightly increased from 3.7% in 2014, when the local account was established, to 4.4% in 2020, and over the past seven years, it was only about 3.2% on average compared to the total mother fund.

The 'mother fund,' formed with government finances to activate the startup and growth of SMEs and ventures, is the parent fund of venture funds. Established in 2005, it has invested a total of 6.0247 trillion KRW as of the end of July this year.

The situation was similar for sub-funds investing in the mother fund. As of 2020, looking at the status of mother sub-funds, among 1,910 companies nationwide that received 2.9093 trillion KRW in investment, 73% (1,395 companies) of the target companies and 77% of the investment amount, 2.2398 trillion KRW, were concentrated in the Seoul metropolitan area. In particular, it was confirmed that even within the metropolitan area, investments were concentrated in Seoul (953 companies, 1.1567 trillion KRW).

The concentration of investment infrastructure in the metropolitan area also remained. Regarding securing professional manpower, which plays a key role in venture investment infrastructure, as of 2020, 90% (149 companies) of venture capital firms and 59% (168 people) of accelerators were concentrated in the metropolitan area.

Especially within the metropolitan area, the concentration in Seoul was severe, with 50% of accelerators (144 people) and 84% of venture capital firms (139 companies) located in Seoul. The regional imbalance, a chronic problem in venture fund investment, has yet to be resolved.

Assemblyman Kim said, “Low investment outside the metropolitan area leads to sluggish growth of regional companies, which in turn causes a vicious cycle of being eliminated from the investment market,” and added, “As the expansion of investment scale in local companies and securing and nurturing professional manpower are urgent, we will strongly demand the expansion of the regional balanced New Deal fund at the ministry level.”

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