"Venture Investment, Preventing Concentration in the Capital Area"… Government Creates 470 Billion Won Regional Fund

Ministry of SMEs and Startups to Announce 'Regional Venture Investment Activation Plan' on the 3rd
Capital Region Venture Investment Concentration at 82% Shows Severe Imbalance
Local Angel Investment → Follow-up Investment → Venture Capital Investment Sequence

At the Digital Transformation Expo held at KINTEX in Goyang, Gyeonggi Province, visitors are examining the 3D hologram solution Hypervision. Goyang=Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Kim Bo-kyung] The government will establish a local-exclusive fund worth more than 470 billion KRW to prevent the concentration of venture investments in the Seoul metropolitan area.

The Ministry of SMEs and Startups announced on the 3rd the "Regional Venture Investment Activation Plan," which involves creating a local-exclusive fund exceeding 470 billion KRW to revitalize regional economies through expanded venture investments.

Although venture investments have reached record highs every year over the past five years, the share of venture investments outside the metropolitan area remains around 20%, maintaining the concentration in the metropolitan area. In particular, last year, the concentration of venture investments in the metropolitan area was 82%, which is more skewed than the concentration of small and venture companies targeted for investment.

The core of this regional venture investment activation plan is to supply a total of more than 470 billion KRW in investment resources necessary for corporate growth. The main components include ▲activation of local angel investments ▲follow-up investments in local companies that received angel investments ▲venture capital investments.

First, a "Local Angel Hub Fund" will be established with 5 billion KRW each in Honam and Chungcheong regions, where local angel hubs have been built, totaling 10 billion KRW. Through regional angel hubs by area, potential angel investors will be discovered, and networking among companies, angel investors, and related organizations will be promoted.

For excellent startup companies located in local areas that have received guarantees from the Korea Technology Finance Corporation, a "guarantee-linked direct investment" worth 27.5 billion KRW will be promoted this year.

Next, a "Local Angel Stepping Stone Fund" will be created to link "angel-follow-up investments." This involves newly establishing local angel stepping stone funds worth about 10 billion KRW each in four metropolitan areas outside the capital region, totaling 40 billion KRW, to ensure that non-metropolitan angel investments are connected to follow-up investments.

The local angel stepping stone fund must invest at least 60% in early-stage startups outside the metropolitan area and follow-up invest at least 40% in non-metropolitan companies that have received angel investments.

Finally, a "Regional New Deal Venture Fund" will be established for ultra-wide area venture investments. In addition to the 100 billion KRW contributed by the Korea Fund of Funds last year to form the Regional New Deal Venture Fund, an additional 60 billion KRW will be contributed this year to create a total fund of 400 billion KRW.

Of the 400 billion KRW, about 230 billion KRW are funds that were raised or had committed contributions last year, and about 170 billion KRW will be newly raised by the Korea Fund of Funds this year.

The established funds are expected to actively invest by discovering regional innovative companies starting this year. In addition to the Busan, Chungcheong, and Southeast regions where funds were raised last year, additional regions will be identified for fund establishment this year.

Park Yong-soon, Venture Innovation Policy Officer at the Ministry of SMEs and Startups, said, "For national balanced development, it is very important to activate the regional venture and startup ecosystem, and venture investments must accompany improvements in startup conditions," adding, "Since venture investments have proven to create jobs, local governments are also urged to participate in activating regional venture investments."

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