[2022 National Audit] Serious Gap in Venture Investment Between Capital Region and Non-Capital Regions

This Year’s New Venture Investments: 81.7% in the Seoul Metropolitan Area, 18.3% in Non-Metropolitan Areas

[Asia Economy Reporter Kim Cheol-hyun] The gap in venture investment between the Seoul metropolitan area and non-metropolitan areas remains severe. According to an analysis of data submitted by the Ministry of SMEs and Startups to Lee Jang-seop, a member of the National Assembly's Industry, Trade, and Small and Medium Venture Business Committee from the Democratic Party, as of the first half of this year, the proportion of venture investment was 81.7% in the Seoul metropolitan area and 18.3% in non-metropolitan areas. Considering that the proportion of venture companies in the metropolitan area was 62.1% in 2021, the gap is pointed out as serious.

According to Representative Lee, the amount of new venture investment in the metropolitan area nearly doubled from 3.0685 trillion won in 2020 to 5.7672 trillion won last year. Accordingly, the metropolitan area's share of venture investment increased by 3.6 percentage points from 78.2% in 2020 to 81.8% in 2021. Even in the first half of this year, 2.9834 trillion won of new funds were concentrated in the metropolitan area, bringing the metropolitan venture investment share to 81.7%.

On the other hand, the proportion of investment in non-metropolitan areas decreased by 2.3 percentage points from 20.6% in 2020 to 18.3%, deepening the polarization of venture investment between the metropolitan and non-metropolitan areas. In particular, the venture investment share in regions excluding the five major metropolitan cities was only 7.7%. Representative Lee pointed out that the budget for the regional innovation (New Deal) venture fund, which was prepared to reduce the venture investment gap, was cut by 7 billion won from 40 billion won in 2022 to 33 billion won in 2023.

Representative Lee said, "The situation is serious, but the Yoon Seok-yeol administration has cut the Ministry of SMEs and Startups' mother fund budget by about 40%, including reductions in the regional venture fund budget," adding, "A balanced development plan to revitalize regional venture investment must be promptly prepared."

Status of New Domestic Venture Investments by Region from 2017 to June 2022 (Source: Ministry of SMEs and Startups · Reorganized by Office of Assemblyman Lee Jang-seop, Unit: 100 million KRW)