National Growth Fund to Expand Direct Investments and Diversify Indirect Investments... Implementation Plan to Be Announced Next Month

Restructuring: Over 15 Trillion Won in Direct Investments, 35 Trillion Won in Indirect Investments
Reforming VC Selection and Management Criteria; Expanding Scale-Up Funding
Establishing a Comprehensive Fund Manager Evaluation System Reflecting

Financial authorities are set to expand the scale of direct equity investments made by the National Growth Fund and diversify the 35 trillion won in indirect investments through vehicles such as scaling up funds and ultra-long-term funds. Specific implementation measures to further support the venture and innovation ecosystem are expected to be finalized and announced next month.

Daeyoung Kwon, Vice Chairman of the Financial Services Commission. Photo by Yonhap News

The Financial Services Commission held a 'National Growth Fund Venture and Innovation Ecosystem Support Roundtable' together with the National Economic Advisory Council at the Korea Federation of SMEs on March 26 to gather on-site feedback from venture, small and medium-sized, and mid-sized companies, the financial sector, and related institutions. Attendees included Kim Sung-sik, Vice Chairman of the National Economic Advisory Council; Daeyoung Kwon, Vice Chairman of the Financial Services Commission; as well as representatives from Korea Development Bank, Korea Growth Investment Corporation, Korea Credit Guarantee Fund, Korea Venture Capital Association, major securities companies, venture capital (VC) firms, and corporate representatives from Megazone Cloud, Socar, and others.

Vice Chairman Daeyoung Kwon emphasized on the day, "The National Growth Fund is a core policy responsible for Korea's growth over the next 20 years, focusing on supporting advanced industry companies in response to global technological competition," adding, "It is a leading public-private cooperative investment system designed to foster an industrial ecosystem that encompasses large corporations, SMEs, ventures, startups, infrastructure, and local regions."

The main focus of the discussion was on increasing scale-up capital for venture and small businesses and improving fund management methods. Direct investment will be managed with over 15 trillion won, with the Korea Development Bank directly selecting the investment targets and conditions. Large-scale investments will be executed according to the capital needs at each corporate growth stage, and if investment demand is sufficient, the scope of direct investment will be further expanded.

The 35 trillion won allocated to indirect investments will be diversified away from the traditional small-scale, dispersed investment model toward scaling up funds, ultra-long-term funds (over 10 years), regional exclusive funds, and exit market funds. This aims to fill the investment gap left by the private sector. The funds for indirect investment will be allocated at a rate of approximately 7 trillion won per year over five years.

Since the performance of indirect investments depends on which VC is selected and the management criteria, the selection of fund managers is considered crucial. Rather than the Korea Development Bank individually screening every investment target, the structure leverages the expertise of private VC firms and private equity funds. The Financial Services Commission plans to finalize the VC selection standards and management methodologies next month. Additionally, the commission will establish a fund manager evaluation system that comprehensively reflects not only simple return rates but also factors such as failure experience, networks, and investment track records.

Based on the feedback gathered at this roundtable, the Financial Services Commission will coordinate with related ministries and conduct further field communication to announce the 'Final Plan to Strengthen Support for the Venture and Innovation Ecosystem via the National Growth Fund' next month.

Vice Chairman Kim Sung-sik emphasized, "Investment to scale up companies capable of becoming Korea’s representative firms in the next 20 years is woefully insufficient, and promising venture and innovative companies are continuously losing competitiveness or relocating overseas because they cannot cross the so-called 'death valley.' The National Growth Fund must bridge this gap."

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