Kospo Raises Concern Over Split Allocation of Fund of Funds Budget, Fears Collapse of Venture Investment Foundation

Discussion on Transition to Phased Investment Raised in National Assembly Budget Subcommittee
"Innovative Companies' Funding to Shrink... Growth Engine Weakened"

The Korea Startup Forum announced on the 21st that it expresses "serious concern" over discussions to shift the budget allocation of the Korea Fund of Funds to a phased or split system.

In a statement released on the same day, the Korea Startup Forum stated, "The Korea Fund of Funds has been a core infrastructure, contributing to about 40% of domestic venture investment funds," and added, "If the budget of this institution, which supports market stability, is switched to a split allocation method, the structural risks pointed out by the industry are highly likely to materialize, so this issue cannot be taken lightly."

On the 20th, Han Sangwoo, Chairman of the Korea Startup Forum, is speaking at the ComeUp 2025 Media Day held at the Global Startup Center (GSC) in Gangnam-gu, Seoul. Korea Startup Forum

Recently, ahead of the review by the National Assembly Special Committee on Budget and Accounts' Budget Adjustment Subcommittee, there have been calls to transition the Korea Fund of Funds budget to a "phased investment method (split allocation)." The argument is that the current structure, which allocates the full amount in the first year despite venture funds typically investing over four years, is inefficient.

However, the industry is concerned that rapidly changing the budget system without sufficient review of the market structure and investment practices could cause severe disruption throughout the startup ecosystem.

The Korea Startup Forum pointed to several concerns: ▲ It would discourage participation from private investors, making it difficult to form venture funds; ▲ If the timing of actual payment requests by private venture capital firms is advanced, the Korea Fund of Funds could face insolvency; ▲ Annual split allocations would, in effect, set a cap on investments, undermining investment autonomy.

The Korea Startup Forum stated, "If the investment foundation is shaken, innovative companies that drive national competitiveness may not be able to secure funding in a timely manner and could disappear from the market," and added, "This would directly result in weakening the future growth engine of the country."

The statement continued, "Innovation is achieved through timely execution and a trust structure that supports it. If this foundation is allowed to be undermined, the competitiveness of Korea's new industries will suffer irreparable damage," emphasizing, "We once again urge a careful reconsideration of the plan to split the Korea Fund of Funds budget, in order to protect an environment where competitive startups can freely take on challenges and grow."

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