"400 Billion Formation Goal"... Ministry of SMEs Selects 4 Regions to Participate in Local Era Venture Fund

Gangwon, Gyeongbuk, Busan, and Chungnam Selected
Pursuing Formation of Mother Funds Totaling 400 Billion KRW
RWA Ratio Reduced from 400% to 100%

The Ministry of SMEs and Startups announced on the 27th that it has completed the selection of non-capital metropolitan local governments to participate in the fund formation through the "2025 Local Era Venture Fund Participating Local Governments Recruitment Announcement."

The Ministry selected four regions?Gangwon, Gyeongbuk, Busan, and Chungnam?as the first areas to establish the Local Era Venture Fund. The total target amount for the mother funds in the selected regions is approximately 400 billion KRW, with each of the four regions planning to form mother funds exceeding 100 billion KRW.

The Local Era Venture Fund, launched for the first time this year, was created to support promising local SMEs and venture companies to grow to a global level through sufficient venture investment. It is a venture mother fund funded by the Korea Fund of Funds, local governments, regional banks, and local anchor companies.

To expand the previously insufficient local venture investment, the Local Era Venture Fund increases the Korea Fund of Funds’ contribution ratio up to 60% and provides bold incentives such as loss coverage priority and excess profit transfer to ensure sufficient inflow of private capital. In particular, the risk-weighted asset (RWA) ratio for banks’ investment in the Local Era Venture Fund has been reduced from the previous 400% to 100%, easing the participation burden on banks.

The Korea Fund of Funds will form regional mother fund operation committees with the four selected metropolitan local governments to establish region-specific mother fund operation strategies. After swiftly forming the mother funds, it plans to proceed with investments targeting venture capital firms in the second half of the year.

Oh Young-joo, Minister of SMEs and Startups, stated, "The Ministry and local governments will work together to support local SMEs and venture companies with global-level technological capabilities to grow through sufficient venture investment."

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