SMEs Ministry to Establish 2 Trillion Won Regional Growth Fund Over 5 Years... Expanding Investment Outside the Capital Area

Mandatory 20% Regional Investment Allocation for Sub-Funds
New Regional Investment Centers to be Established in Four Major Regions and Three Special Zones

The Ministry of SMEs and Startups will establish a 2 trillion won Regional Growth Fund over the next five years to invigorate local venture investment and will strengthen regional investment infrastructure by setting up investment centers in non-metropolitan areas across the country.

Signboard of the Ministry of SMEs and Startups in Sejong City. The Asia Business Daily Database

On the 14th, the Ministry of SMEs and Startups and Korea Venture Investment announced that they will actively implement policies to enhance the regional venture investment infrastructure, including the expansion of regional investment centers based on the performance of regional funds, in order to advance the local venture investment ecosystem.

According to the ministry, since 2006, the Korea Fund of Funds has established a total of 113 regional funds worth 1.8 trillion won. Among these, the highest-performing regional fund achieved a 15.2% return and a 3.4x return multiple by making early investments in companies such as Mplus in Cheongju, Chungbuk, and Peptron in Daejeon. The average return for regional funds liquidated in the past five years was also tallied at 11.6%.

Building on these results, the ministry plans to accelerate the expansion of the proportion of regional investments. This year, sub-funds in which the Fund of Funds invests will be required to allocate at least 20% of investments to regional companies. In addition, management companies that invest at least 30% in SMEs and venture companies located outside the capital area will be given extra points in selection.

To foster a self-sustaining venture investment ecosystem in local areas, the ministry will also expand the establishment of Regional Growth Funds. The Regional Growth Fund is a regional venture parent fund jointly created and managed by local communities, local governments, and the Fund of Funds. The ministry plans to establish Regional Growth Funds worth more than 2 trillion won over five years from 2026 to 2030.

In the second half of this year, Regional Growth Funds totaling 450 billion won will first be established in five regions: the Daegu-Gyeongbuk area, the Southwestern area, Jeonbuk, Daejeon, and Ulsan. Notably, the four major science and technology institutes—Korea Advanced Institute of Science and Technology (KAIST), Daegu Gyeongbuk Institute of Science and Technology (DGIST), Gwangju Institute of Science and Technology (GIST), and Ulsan National Institute of Science and Technology (UNIST)—will participate as investors, and specialized funds for regional startup cities will also be promoted.

Regional investment hubs will also be expanded. Korea Venture Investment will open regional investment centers focusing on the four major regions and three special zones outside the capital area. From the second half of next year, investment centers will be sequentially established in Gwangju (Southwestern area), Daejeon (Central area), and Daegu (Daegu-Gyeongbuk area). The existing Busan office will be expanded and reorganized as a Southeastern area investment center. These regional investment centers will serve as key hubs for the local venture investment ecosystem, not only managing Regional Growth Funds but also discovering local investment institutions and nurturing venture capital.

Kim Bongdeok, Director of Venture Policy at the Ministry of SMEs and Startups, said, "The consistent efforts of the Fund of Funds to foster the regional investment ecosystem have been proven by the high returns of regional funds. We will actively promote policies to advance the regional venture investment ecosystem, so that promising regional companies and local investors can grow together."

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