Content is the Future... 700 Billion Won 'K-Content Fund' Established

Ministry of Culture, Sports and Tourism Increases Mother Fund Cultural Account by 245 Billion Won to Record High
New Investment Increased by 80 Billion Won
6.5 Billion Won Invested in Films Released During COVID-19 Period

On the 31st, the Ministry of Culture, Sports and Tourism announced that it will invest 395 billion KRW through the first regular public offering of the K-Content Fund (Mother Fund Culture and Film Account) to create a venture investment association worth 700 billion KRW. This is the largest scale ever, 245 billion KRW (54.4%) more than last year. It reflects the government's strong will to foster the content industry as a national strategic industry.

The Mother Fund Culture Account aims to form a sub-fund worth 630 billion KRW, centered on 370 billion KRW of government investment. The new investment amount (270 billion KRW) has increased by 80 billion KRW compared to the previous year, which is expected to provide significant support to content companies facing difficulties in fundraising. The sub-fund will be reorganized into five sectors: Content Intellectual Property (IP) Fund, Content Export Fund, New Technology Content Fund, M&A and Secondary Fund, and General Culture Fund. A Ministry of Culture, Sports and Tourism official explained, "We focused on responding to recent changes in the content industry environment while expanding private capital participation through improved profitability."

The Content IP Fund, established for the second consecutive year, has a government investment of 120 billion KRW and a target formation amount of 200 billion KRW. It supports domestic content producers in securing IP. The official said, "This reflects the intensifying competition to secure original content IP," adding, "Since the target formation amount has been expanded by 50 billion KRW compared to last year, it is expected to serve as a foundation for becoming a strong intellectual property nation." The Content Export Fund has a government investment of 90 billion KRW and a target formation amount of 150 billion KRW. It reflects the content export trend, which has recorded an average annual growth rate of 7.1% over the past five years. It will be intensively invested in content businesses and companies aimed at export.

The New Technology Content Fund has a government investment of 60 billion KRW and a target formation amount of 100 billion KRW. This is a result of focusing on the rise of the content market fused with new technologies such as artificial intelligence (AI), virtual and augmented reality, and can lead to the next-generation growth engine of the content industry. The M&A Fund established last year has been expanded in scope and scale and reorganized into the M&A and Secondary Fund. The government investment is 60 billion KRW, and the target formation amount is 100 billion KRW. It supports the expansion of content companies through corporate acquisition and merger investments, while also supporting the acquisition of pre-issued old shares (stocks, bonds related to depreciation) of small and venture companies through secondary investments (transactions where existing funds sell shares of small and venture companies they hold to other funds to liquidate them).

The General Culture Fund has a government investment and target formation amount of 40 billion KRW and 80 billion KRW, respectively. The scope of primary investment has been broadly recognized across the cultural industry sector, significantly relaxing investment requirements. A Ministry of Culture, Sports and Tourism official said, "We plan to guarantee high autonomy for sub-fund operators and improve profitability to contribute to enhancing the K-Content Fund's returns."

Considering the contraction of private investment, the Mother Fund Film Account has increased the government's new investment from 8 billion KRW to 25 billion KRW. Of this, more than 6.5 billion KRW will be used to promote the release of films produced during the COVID-19 period. The official said, "More than 5 billion KRW will also be invested through a separately formed release promotion fund," adding, "We plan to attract investment by applying incentives such as priority loss coverage (a system where the Mother Fund covers losses for private investors first in case of losses) to private investors."

The Korean Film Main Investment Fund has a government investment of 21 billion KRW and a target formation amount of 42 billion KRW. The IP utilization rights of films with main investments are held by the production companies. The fund operator is responsible for all aspects including raising the total production cost, executing production expenses, completing production, release, and settlement, thereby supporting development. The Mid-to-Low Budget (net production cost under 3 billion KRW) Korean Film Fund has a government investment of 11.5 billion KRW and a target formation amount of 23 billion KRW. It mandates investment ratios of 25% and 10% for mid-to-low budget (net production cost under 3 billion KRW) and low-budget films, respectively, to activate production. The official explained, "If the investment target work is the director's first or second feature film, the production cost cap will not be applied to promote the discovery of new directors."

Proposal submissions will be accepted online from 10:00 AM on the 14th to 2:00 PM on the 20th of next month. The final fund operators will be selected and announced in April. For more details, please refer to the Korea Venture Investment website.