Seongdong-gu Establishes and Operates 'Impact Fund' for Investment in Social Venture Companies

First Local Government to Sign Agreement with Investor Network Meeting, Supporting Social Venture Discovery and Growth through Follow-up Investment Connections

Jung Won-oh, Mayor of Seongdong-gu, touring the exhibition site of startup companies such as social ventures after signing the agreement

[Asia Economy Reporter Park Jong-il] Seongdong-gu (Mayor Jung Won-oh) is establishing and operating a 2 billion KRW-scale 'Impact Fund' to support investments in early-stage startup social venture companies.

This is the first impact investment fund led by a local government district.

'Impact investment' refers to investments in businesses or companies that generate not only financial returns but also positive social or environmental impacts. It mainly involves funding for companies with significant social influence, such as social ventures.

Since enacting the nation's first 'Ordinance on Fostering Social Ventures and Creating an Ecosystem' in 2017, Seongdong-gu has taken the lead in developing the Seongsu-dong area into a nationwide hub for social ventures through various specialized policies including hosting the Social Venture EXPO, operating the Social Venture Hub Center, and providing market access support.

This year, the district has initiated the creation of an 'Impact Fund' to invest in social ventures that have innovative potential but face difficulties in securing funding due to undervaluation of their financial worth.

Following last year's Social Venture EXPO investment presentation and operation of investment consultation desks to foster an impact investment atmosphere, the district has established a total 2 billion KRW-scale 'Impact Fund' by contributing 500 million KRW from the district budget and raising an additional 1.5 billion KRW through investment attraction.

After obtaining approval from the district council in June for the fund's launch, the district completed all preliminary procedures and selected 'MY Social Company (MYSC)', an impact investment firm, as the fund manager. Actual investments are scheduled to begin after the formation and registration of the impact investment association in September.

On the 7th, to promote follow-up investment linkage and activate social ventures, the district signed a business agreement with the 'Impact VC Network,' a network of social venture investors.

The 'Impact VC Network' is composed of eight leading domestic venture capital firms centered around The Wells Investment, which has a strong interest in impact investment and the development of the social venture ecosystem.

The agreement includes cooperation on activating impact investments, consulting, education, and event support, establishing a collaborative system for investment activation and ecosystem development.

A district official stated, "The district's impact fund will provide early-stage startup investment funds of about 300 million KRW. The 'Impact VC Network' will handle large-scale follow-up investments for companies that have grown thereafter," adding, "This is not just short-term support but aims to link continuous growth support to build a social impact ecosystem and expand social value creation."

On the 7th, the signing ceremony of the business agreement with 'Impact VC Network'

Jung Won-oh, Mayor of Seongdong-gu, said, "Although this impact fund is small compared to the large-scale venture investments promoted by the government, it is expected to be a great support for small value-driven companies operating invisibly within the local community," and added, "We hope that social venture companies receiving early investments will grow and become large unicorn companies through follow-up investments."