SMEs Ministry Discusses Fund of Funds Contribution Strategy... Introduces Fund of Funds Disclosure System

Providing Operational Information on Fund of Funds Contributions and Formations

The Ministry of SMEs and Startups held the "2nd Fund of Funds Contribution Strategy Committee" chaired by Minister Hansung-sook, where they discussed next year’s contribution plans and future development directions. They also decided to introduce a disclosure system to provide information on the Fund of Funds’ operational status and performance.

The Ministry of SMEs and Startups announced on the 14th that it held the '2nd Basic Fund Investment Strategy Committee' chaired by Minister Han Sung-sook. Ministry of SMEs and Startups

Attendees at the meeting included Minister Hansung-sook, Song Byungjun, Chairman of the Korea Venture Business Association, Lee Joonhee, Vice Chairman of the Korea Venture Capital Association, Hwang Seongyeop, Chairman of the Korea Financial Investment Association, as well as experts from various sectors such as SMEs, startups, and artificial intelligence (AI).

Since its launch in 2005, the Fund of Funds has contributed a cumulative total of 17 trillion won, creating sub-funds worth a combined 50 trillion won and investing in more than 11,700 venture and startup companies. By last year, the Fund of Funds that had been liquidated achieved a stable average annual return of 8%, demonstrating the growth potential of ventures and startups.

The Fund of Funds has supported innovative startups in crossing the “valley of death” and growing into unicorn companies. Approximately 87% of domestic unicorns (large-scale startups) have received investment from the Fund of Funds, and over the past five years, 82% of companies that went public on KOSDAQ under the technology exception system were portfolio companies of the Fund of Funds.

To promote the spread of regional venture investment ecosystems, a dedicated regional investment fund of 1.8 trillion won was established, investing in more than 600 regional innovative companies. Over the past five years, funds that have been liquidated have recorded returns exceeding 11%.

To encourage the participation of diverse institutional investors, the Ministry is also accelerating the creation of the “LP (Limited Partner) Growth Fund.” Together with 25 institutions, including pension funds, financial institutions, and corporations, a total of 850 billion won in sub-funds will be established. In addition, regional growth funds will be set up targeting the "four mega-regions and three strategic zones," providing incentives to promote local investments.

The Ministry plans to introduce a disclosure system to systematically release information on the operation and performance of the Fund of Funds. Information will be provided on all aspects of fund management, including contribution, formation, investment, and recovery, as well as liquidation returns and best practices of portfolio companies. To strategically invest government resources, the Ministry will also strengthen the relay investment system, including joint IR (Investor Relations) sessions between funds and investment incentives.

Minister Hansung-sook stated, “Over the past 20 years, the Fund of Funds has played a key role in discovering promising venture and startup companies and nurturing them into unicorns (large-scale startups), as well as driving the growth and development of the venture investment market. Together with related ministries, we will continue to strengthen the Fund of Funds’ role as a catalyst for venture investment, including fostering big tech companies, expanding the regional investment ecosystem, and attracting private capital into the market.”

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