54 Funds Apply for 800 Billion KRW in the 3rd Round of the Motae Fund Investment

[Asia Economy Reporter Moon Hyewon] On the 9th, the Ministry of SMEs and Startups and Korea Venture Investment announced that 54 funds applied for approximately 800 billion KRW in investment in the 3rd round of the mother fund investment project under the jurisdiction of the Ministry of SMEs and Startups. The competition rate corresponds to 2.3 to 1 based on the planned investment of 354 billion KRW.

The mother fund plans to selectively invest around 350 billion KRW from the application demand to create a fund of about 700 billion KRW together with private capital.

As part of the Korean New Deal policy, the Smart Korea Fund initially aimed to raise 600 billion KRW in this 3rd round of investment, but the total raised amount of funds applying for mother fund investment exceeded 1 trillion KRW. Considering that a fund worth 580 billion KRW is currently being raised through previous investment projects, it is expected that the original target of 1 trillion KRW will be easily achieved despite the investment sentiment contraction caused by the COVID-19 impact.

In particular, the Smart Korea Fund is characterized by mentor companies participating as sponsors to support the growth of junior companies through fund investment. Seven mentor companies participated in the Smart Korea Fund launch MOU in July, and an additional seven mentor companies (Naver, Netmarble, Krafton, Musinsa, L&P Cosmetic, Bespin Global, Shinsegae Group) expressed their intention to participate in this investment project.

The Regulatory Free Zone Fund, which focuses on investing in innovative companies and non-metropolitan local companies within regulatory free zones, also applied for 48.4 billion KRW in investment, exceeding the original mother fund investment plan of 25 billion KRW, recording a competition rate of 1.9 to 1. The Ministry of SMEs and Startups explained that it is meaningful that the target was exceeded despite limiting applicants to venture capitals headquartered in local areas to secure regional venture investment capabilities.

In the case of the Materials, Parts, and Equipment Fund, 198.6 billion KRW in investment requests were received against a mother fund investment of 27.5 billion KRW, resulting in a competition rate of 7.2 to 1. The Ministry of SMEs and Startups explained that this is evaluated as a result of the government's policy to foster materials, parts, and equipment and companies' active investment intentions.

Kim Ju-sik, head of the Venture Investment Division at the Ministry of SMEs and Startups, said, “Despite the impact of COVID-19, venture capitals are actively showing their willingness to invest,” adding, “We will manage the funds so that they are raised early and flow quickly to companies.”