SMEs Ministry Invests 875 Billion Won in Mothership Fund, Establishes 1.8 Trillion Won Venture Funds

The Ministry of SMEs and Startups has selected 60 venture funds totaling 1.8 trillion won through the first regular investment project of the Mothership Fund this year.

On April 29, the Ministry announced that it invested 875 billion won to select 60 funds amounting to 1.7548 trillion won in venture capital. The selected funds are required to be established within three months, with formation expected by July. These funds are anticipated to contribute to the growth of venture investment as they begin full-scale investments in the second half of the year.

Ministry of SMEs and Startups

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The "Next Generation Unicorn Fostering Project" for nurturing AI·Deep Tech unicorns in startup and scale-up sectors was selected at a scale of 824.4 billion won. The startup sector, focusing on promising startups founded by professionals, consists of 12 funds totaling 374.4 billion won. The scale-up funds, which support scale-up investments of at least 10 billion won per company in the AI·Deep Tech sector, comprise three funds with a total of 450 billion won.

The early-stage startup sector was selected at 356.2 billion won. Considering the recent contraction in early-stage investments, the invested amount was increased, making it the second largest after the Next Generation Unicorn Project. Within this, the dedicated "Rookie League" for new and small venture capital firms and startup planners consists of 10 funds totaling 168.4 billion won, and the "early-stage small" sector was selected at 54.8 billion won. This expands the foundation for growth while maintaining diversity and dynamism in the domestic venture investment industry.

The "Re-Challenge Fund," which supports the renewed entrepreneurial efforts of re-founders, was selected with eight funds totaling 210.8 billion won. Considering the unique characteristics of startups that can easily pivot their business, from this year, the investment scope has been expanded to include companies undergoing project-based business model transitions (pivoting).

Funds to vitalize the exit market will also be expanded. Three secondary funds, totaling 140 billion won, were selected to acquire existing shares of invested companies or LP stakes in venture funds. The M&A fund, which supports business succession for small and medium-sized enterprises, was also selected at a scale of 100 billion won for the second consecutive year. These efforts are expected to support a virtuous cycle of investment, exit, and reinvestment in the venture market.

Additionally, the Ministry selected a 70 billion won youth startup fund, a 16.7 billion won women’s enterprise fund, and a 36.7 billion won impact fund, continuing to provide essential seed capital to areas requiring policy-driven development.

The Ministry of SMEs and Startups has improved regulations so that venture capital firms can focus on high-risk investments. To stimulate non-metropolitan venture investment, the Ministry mandated that at least 20% of investments in its general Mothership sub-funds be allocated to regional investments. Management firms that actively pursue non-metropolitan and early-stage investments were given preferential selection, strengthening incentives for regional and early-stage investment. Over 80% of the funds selected in this round include additional regional investment obligations, and the proportion of management firms based outside the capital area increased compared to last year.

The payout rate of additional performance fees to fund managers, determined by their regional and early-stage investment performance, will also be increased. To encourage long-term investment, preferential selection was given to early-stage startup funds proposing a fund duration of 10 years or more. Among the incentive-eligible funds, 70% are long-term funds.

To establish a virtuous cycle of "investment → exit → reinvestment," up to 20% of investments in existing shares will be temporarily recognized as a primary investment purpose until 2030. This will expand the demand for secondary investments and broaden exit opportunities for existing investors, thereby encouraging private capital to be reinvested into the venture market.

Han Sung-sook, Minister of SMEs and Startups, stated, "Last year, domestic venture investment reached 13.6 trillion won, the second largest amount ever, and the number of investments also hit an all-time high, indicating continued vitality in the venture investment market. We will make every policy effort to ensure that the 1.8 trillion won in venture funds selected through this investment project are swiftly formed and that growth capital is supplied to ventures and startups in a timely manner."

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