100 billion KRW from the city, 30 billion KRW from Busan Bank and financial institutions, 60 billion KRW in mother fund capital from the Ministry of SMEs and Startups
Sub-funds to total 200 billion KRW, investment targets set for Busan's strategic, innovative, smart, and Raikon sectors
Busan City (Mayor Park Hyung-jun) has been selected as a local government capable of establishing a venture fund worth 100 billion KRW.
On the 27th, Busan City announced that it was finally selected as the preferred negotiator in the local government recruitment results for the ‘Local Era Venture Fund’ hosted by the Ministry of SMEs and Startups.
The Local Era Venture Fund is being promoted by the Ministry of SMEs and Startups under the banner of ‘realizing a local era centered on ventures and startups.’
With this selection, Busan City secured 60 billion KRW in mother fund capital, achieving the creation of a total 100 billion KRW mother fund, and will officially establish the ‘Busan Innovation Scale-up Fund.’
Since forming the Busan Future Growth Venture Fund last year, the city has achieved the creation of a regional growth mother fund worth 100 billion KRW annually.
The so-called Busan Innovation Scale-up Fund is expected to form a total 100 billion KRW mother fund by combining 10 billion KRW from Busan City, 30 billion KRW from financial institutions such as Busan Bank, and 60 billion KRW from the government’s mother fund capital. The Korea Venture Investment Corp. will manage the mother fund.
The sub-funds will be formed at around 200 billion KRW. The city will lead the ‘9 Strategic Industries of Busan’ to foster future new industries, advance core industries, and build global urban infrastructure. It plans to designate early and growth-stage startups and venture companies, smart advanced manufacturing companies, and entrepreneurial small business owners (Raikon) as the main investment targets.
To enhance the expertise and transparency of the mother fund, an ‘Operating Committee’ responsible for major decision-making will be established and operated, and the specific formation details of the sub-funds will be finalized through future consultations among the investing institutions.
Additionally, incentives will be provided to lower the risk of loss and increase returns for private capital to ensure sufficient inflow of private funds.
This project was promoted considering the voices from the field, where despite numerous consultations with private investors to establish venture funds investing in the region by local governments, most did not proceed to investment due to concerns over potential losses.
All private investors participating in the fund will be provided with loss-first coverage, excess profit transfer, and equity purchase rights (call options). This has opened a lifeline for regional investors, who have faced the greatest difficulties in forming funds for regional investment companies.
Mayor Park Hyung-jun of Busan said, “In the difficult domestic and international economic situation, the ‘Busan Innovation Scale-up Fund’ is the seed money necessary for funding the growth of regional innovative companies that leave Busan due to lack of follow-up investment, as well as early-stage startups, and serves as a catalyst to attract follow-up investments.” He added, “It will act as a catalyst to produce many excellent innovative companies in the region.”
The mayor emphasized, “We will continue to create mother funds that nurture local ventures and startups, creating an environment where companies established in Busan can naturally receive investments.”
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