This Year, 1.3 Trillion Won Invested in the Mother Fund... Total 2.5 Trillion Won Venture Fund Raised

Public Report on July 7 by Korea Venture Investment, a Support Organization for the Venture Investment Ecosystem

Park Young-sun, Minister of SMEs and Startups

[Asia Economy Reporter Kim Cheol-hyun] This year, a total of 1.3 trillion KRW will be supplied to create a venture fund worth 2.5 trillion KRW. Park Young-sun, Minister of the Ministry of SMEs and Startups, received the 2020 business plan containing this information from Korea Venture Investment Corp. (CEO Lee Young-min) on the 7th. The theme of this business plan is 'Realizing a venture investment ecosystem where startups and venture companies are properly evaluated and invested in.'

Korea Venture Investment Corp., established in 2005 to operate the government’s mother fund, is the only specialized public institution in Korea that supplies investment funds to the venture investment market by receiving 5.6 trillion KRW in entrusted funds from 10 ministries including the Ministry of SMEs and Startups, Ministry of Culture, Sports and Tourism, and Ministry of Science and ICT. So far, Korea Venture Investment has created 765 sub-funds worth 24.8617 trillion KRW through the mother fund and invested 18.1753 trillion KRW in 6,035 startups and venture companies. Since the establishment of Korea Venture Investment, which professionally supplies funds to the venture investment market, the scale of venture funds raised annually has grown about 7.5 times from around 500 billion KRW to 4.1 trillion KRW, and new venture investments have increased about 7.1 times from 600 billion KRW to 4.3 trillion KRW.

In particular, among the 11 unicorns (unlisted ventures valued at over 1 trillion KRW) that have emerged in Korea, 9 companies grew through investments from mother fund sub-funds in their early stages. These 9 unicorn companies received a total of 114.4 billion KRW from 36 funds backed by the mother fund. Some of these investments have been recovered, achieving a success of 16.4 times the principal amount. Additionally, among the 992 companies listed on the KOSDAQ market from 2005 to 2019, 350 companies, accounting for 35.3%, grew through investments from mother fund sub-funds. Companies that received mother fund investments took 2.7 years less to go public compared to non-invested companies.

Based on this, Korea Venture Investment plans to maintain the growth momentum of venture investment this year by supplying a total of 1.3 trillion KRW, including the largest-ever budget of 1.1 trillion KRW, to create a total venture fund of 2.5 trillion KRW. Specifically, this year, the plan is to balance the creation of funds for the startup stage and the subsequent leap stage. First, more than half of the investment resources, 520 billion KRW, will be supplied to startup funds such as early-stage startups and youth startups to create a fund worth 920 billion KRW. In addition, to firmly support the scale-up of innovative startups and lay the foundation for the birth of unicorns, 380 billion KRW will be invested in the Jump-up Fund, which supports growth after startup, creating about 1 trillion KRW. Besides this, 397.5 billion KRW will be invested in sector-specific policy funds such as culture, content, and patents to create 600 billion KRW. Korea Venture Investment has also set a goal to supply a total venture fund in the high 4 trillion KRW range to the venture investment market this year, including pure private funds.

A Korea Venture Investment official said, "We will strengthen our role as a creator of the venture investment ecosystem beyond our role as a fund investor," adding, "We plan to closely connect investors and companies so that promising startups and venture companies can be properly evaluated and quickly invested in by utilizing domestic and international venture capital networks."