"Globalizing the Venture Ecosystem Requires Improved Criteria and Systems for Overseas Startups"

Ministry of SMEs and Startups and Korea Venture Investment Host 'Mother Fund Policy Forum'

Discussion on Overseas Startup Recognition Criteria and Institutional Improvement Measures

There have been calls for institutional improvements to expand investments in overseas startups and to ensure that companies contributing to the domestic economy are not marginalized, as part of efforts to globalize the venture ecosystem.

On the 2nd, at the Westin Seoul Parnas Hotel in Gangnam-gu, Seoul, Noh Yongseok, First Vice Minister (center front row), took a commemorative photo with attendees at the "2026 1st Basic Fund Policy Forum." Ministry of SMEs and Startups

On April 2, the Ministry of SMEs and Startups and Korea Venture Investment Corp. held the '2026 1st Mother Fund Policy Forum' at the Westin Seoul Parnas Hotel in Gangnam-gu, Seoul, to discuss the operational status, performance, and key issues of the Mother Fund.

The first session centered on the globalization of venture investment and institutional improvement measures. Participants agreed on the need to activate overseas startups in order to connect domestic and international startups on the global stage and to attract foreign investment.

There was a consensus that the Mother Fund should expand its domestic and international investment network and play a greater role as a catalyst for long-term investment, so that deep tech ventures and startups, which require large-scale investments, can grow into unicorns and big tech companies on the global stage.

Jungwook Lim, Co-CEO of Startup Alliance, gave a presentation on "Fostering Global K-Startups," focusing on changes in the way startups enter the United States and the policy barriers they face.

Lim explained, "The number of startups being founded as U.S. corporations is increasing. This is to enter larger markets, operate freely outside of regulatory environments, and attract large-scale investments from global VCs. The proportion of direct startups founded in the U.S. is 85.5%, while the ratio of 'flip'—converting a Korean corporation into a U.S. entity for capital attraction or market entry despite tax burdens or shareholder opposition—is 14.5%."

Status of Startups Entering the U.S. Market. Jungwook Lim, Co-CEO of Startup Alliance

Although overseas startups, including those in the United States, are increasing, global Korean startups often face limitations in receiving government support or investment. Because they are not Korean corporations, they are excluded from government support, and when VCs or accelerators attempt to invest in overseas Korean-owned companies, it can be difficult to execute investments due to constraints such as LP agreements. Additionally, when a Korean company flips to a U.S. entity, founders face high capital gains taxes, which is a practical impediment to globalization.

Lim emphasized, "A paradigm shift is required to recognize successful Korean entrepreneurs as national assets. I hope that dual nationality for global K-startups will be permitted, and that the criteria for policy support will be broadened from corporate location to the entrepreneur's identity."

There were also suggestions that the criteria for recognizing overseas startups should be improved to focus on their contribution to the domestic economy, rather than external factors such as corporate location or domestic employment. The Overseas Startup System recognizes investments in foreign-incorporated companies that make substantial contributions to the domestic economy as primary investments by venture investment associations. It has been pointed out that institutional improvements, such as simplifying documentation and reducing administrative procedures and timelines, are necessary so that venture capital can make preemptive investments in overseas startups with growth potential.

Jungah Ryu, CEO of Muirwoods Ventures, noted, "Despite the excellent policy intent, the Overseas Startup System lacks market awareness and participation is low on the ground. Complex administrative procedures and documentation requirements hinder activation of the system," adding, "The system should be restructured to support growth at every stage prior to investment. Introducing a 'recognition first, verification later' framework could help balance administrative burdens and investment risks."

The second session focused on the role and initiatives of the Mother Fund in vitalizing local venture investment ecosystems. Participants agreed that the Mother Fund should expand its role in building investment infrastructure, such as facilitating networks between local ventures, startups, and venture capital, and providing regional venture investment information.

The main reason for the sluggishness of regional venture investment is that venture capital and startup infrastructure are concentrated in the metropolitan area. According to The VC, the share of regional investment among general venture investments was 16.5% last year, a decrease from 21.6% in 2023. However, investment returns in non-metropolitan areas surpassed those in the metropolitan area. An analysis of KB Investment's internal data showed that investments in non-metropolitan companies had a higher proportion in high-performing sectors. While investments in the metropolitan area were concentrated in lower-yielding sectors like gaming and media, non-metropolitan investments focused on IT software and hardware, as well as bio and healthcare.

Beomryeol Yoon, CEO of KB Investment, stated, "The portfolio returns on regional investments exceeded those of the metropolitan area, as we invested in promising startups aligned with regional strategic industries and infrastructure. There is a need to foster specialized regional industries and supply venture funds tailored to these industries."

Noh Yongseok, First Vice Minister of the Ministry of SMEs and Startups, said, "Since its launch in 2005, the Mother Fund has invested 37 trillion won to support the growth of over 11,000 ventures and startups. About 86% of domestic unicorns and more than 60% of KOSDAQ-listed companies in the past five years have grown within the Mother Fund investment ecosystem. As we mark 20 years since its inception, it is time to take the next step based on these achievements."

Vice Minister Noh added, "The Mother Fund needs to play a greater role in providing long-term and stable patient capital, especially in strategic industries such as deep tech, to help our startups lead in the global market. A balanced ecosystem is needed so that the capabilities of venture investment can spread beyond the metropolitan area to the entire country."

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