Large Corporations, Banks, and Successful Venture Companies
Joint Investment by Private Entities
The government is establishing a fund worth 2 trillion won to support startups.
On the 11th, the Ministry of SMEs and Startups announced that it will consult with private investors to co-invest with the Korea Fund of Funds in the ‘Startup Korea Fund,’ which is being created to foster small and venture businesses.
The ‘Startup Korea Fund’ is structured as a joint investment by the Korea Fund of Funds, large corporations, banks, successful venture companies, and various other private entities. It symbolizes the core mission of ‘Startup Korea’ to create a venture investment ecosystem led by the private sector.
The goal is to raise 2 trillion won over four years from this year through 2027. This year, the Korea Fund of Funds plans to invest 150 billion won to raise more than 500 billion won. The Korea Fund of Funds is a fund through which the government invests in venture capital firms instead of directly investing in individual companies, and Korea Venture Investment Corp., an affiliate of the Ministry of SMEs and Startups, is responsible for managing the fund.
In August last year, the government announced the ‘Startup Korea Comprehensive Measures,’ outlining mid- to long-term startup policy directions. Since then, through gathering opinions from various industry stakeholders including private investors, venture capitalists, and startups, incentives and investment sectors to encourage private investor participation have been specified.
By reducing the Korea Fund of Funds’ investment ratio from around 50% to about 30% through the ‘Korea Fund of Funds-private joint investment structure,’ strong incentives such as priority loss coverage will be provided to enable the private sector to take a more active role in venture investment.
Private investors wishing to co-invest in the ‘Startup Korea Fund’ can respond to a survey to express their intention to participate during the first consultation period from the 11th of this month to the 8th of next month. Detailed investment consultations will then proceed. Subsequently, memorandums of understanding will be signed with companies and financial institutions that confirm their investment, and joint announcements for selecting venture capital firms will be made, marking the start of the full-scale fund formation.
Lee Eun-cheong, Venture Policy Officer at the Ministry of SMEs and Startups, stated, "The Startup Korea Fund is a structure where the Korea Fund of Funds and the private sector jointly invest to maximize the catalytic effect of the Korea Fund of Funds," adding, "It is expected to serve as an opportunity for the public and private sectors to jointly transform the atmosphere of the venture investment market."
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