Speed of 1 Trillion Won Mother Fund Investment... Venture Investment Recovery Continues

Minister Oh Young-joo Discusses Measures to Revitalize Venture Investment with Industry Leaders
Expansion of Startup Early-Stage Contributions in Response to Investment Contraction

The Ministry of SMEs and Startups has decided to accelerate its contributions to the Korea Fund of Funds to boost the recovery of venture investment.

On the 16th, the Ministry held a meeting with the venture investment industry at Korea Venture Investment in Seocho-gu, Seoul, to discuss the 2025 Fund of Funds contribution direction and measures to revitalize venture investment.

Presided over by Minister Oh Young-joo, the meeting was attended by a balanced group ranging from large and medium-sized venture capital firms to rookie venture capitalists, including Yoon Geon-su, chairman of the Korea Venture Capital Association. Representing the Creative Economy Innovation Centers responsible for discovering and nurturing innovative startups and early-stage investments in local regions, the Ulsan Creative Economy Innovation Center also participated.

The first agenda item was an explanation by the Ministry of SMEs and Startups on the '2025 Fund of Funds Contribution Direction.'

This year, the Ministry plans to contribute a total of 1 trillion KRW to the Fund of Funds to support the formation of venture funds worth 1.9 trillion KRW. First, it will establish a ‘Global Fund’ exceeding 1 trillion KRW to support overseas investment attraction for domestic startups. From this year, the contribution fields will be diversified to include artificial intelligence (AI), climate tech, and secondary markets, and specialized management will be conducted considering preferred investment sectors by country.

For local regions, a record-high contribution of 200 billion KRW will be made. This is a follow-up measure to the ‘Local Era Venture Fund Formation Plan’ announced last year, where the Fund of Funds, local governments, regional banks, and regional anchor companies plan to jointly establish a ‘Local Era Venture Fund’ exceeding 1 trillion KRW over three years.

Considering the recent contraction in early-stage investments, 100 billion KRW will be contributed to the startup early-stage sector, a 25% increase compared to the previous year. Funds that are not in the startup early-stage sector but contribute to early-stage investments will be preferentially selected if they propose early-stage investment obligations.

The Fund of Funds contribution project will be restructured to be market-friendly. To revitalize the secondary market, for two years, the purchase of existing shares will be temporarily recognized as a primary investment purpose (up to 20%), and the management fee system will be completely revamped to support venture capitalists' challenging investments.

Meanwhile, venture capitalists and others attending the meeting requested the influx of new venture investment participants such as retirement pensions, support for revitalizing the secondary market, expansion of seed money for bio investments, support for the globalization of domestic VCs, and support for the public accelerator role of the Creative Economy Innovation Centers. These suggestions will be reviewed internally and coordinated with related ministries and reflected in future policy implementation processes.

Minister Oh stated, “Despite difficult economic conditions such as expanding domestic and external uncertainties and sluggish domestic demand recovery, investment in innovative ventures and startups, which are future growth engines, must continue unwaveringly.” He added, “The Ministry will announce the 1 trillion KRW Fund of Funds contribution project early in January to quickly supply funds to the venture investment market, and for the next two years, will temporarily recognize the purchase of existing shares as a primary investment purpose to promote a virtuous cycle of ‘investment → recovery → reinvestment.’”

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