Mother Fund Finalizes Selection of 700 Billion Won Venture Funds

Selection of Venture Funds for the 2025 First Regular Fund of Funds Investment Completed
34 Venture Funds Totaling 753.8 Billion Won Selected
Proactive Support to Stimulate Venture Investment

The Ministry of SMEs and Startups announced on April 23 that it has completed the selection of venture funds for the "2025 First Regular Fund of Funds Investment" project. Through this investment initiative, the ministry has committed 374.7 billion won to select 34 venture funds, totaling 753.8 billion won in scale. The selected funds are required to be established within three months, with most expected to be formed by July. As these funds begin investing in earnest in the second half of the year, they are expected to help accelerate the recovery of venture investment.

First, the "Rookie League," which is dedicated to new and small venture capital firms, has selected 10 funds with a total value of 177.1 billion won. Of this year's 1 trillion won fund of funds investment budget, 10%, or 100 billion won, has been allocated to the Rookie League to provide opportunities for new and small venture capital firms to establish funds and pursue bold investments.

In response to the recent contraction in early-stage investment, the ministry has increased its commitment to the startup early-stage sector, which was selected as the next largest with a scale of 169.9 billion won. Notably, this year, a new "Startup Early-Stage Small" category has been established to support investments in early-stage companies through small funds of around 5 billion won. Startup planners, Centers for Creative Economy and Innovation, and university technology holding companies with strengths in discovering and nurturing early-stage companies have been selected in this category.

The "Bio Fund" has also been selected with a scale of 50 billion won, which is expected to help early-stage bio companies, such as those in pre-clinical stages, that are currently facing difficulties in raising investment. The Lycon Fund, which was newly established last year and has expanded its investment scope nationwide including the Seoul metropolitan area from this year, has been selected with a scale of 17.1 billion won. The fund will continue to support entrepreneur-type small business owners so they can grow in the lifestyle and culture sectors based on innovative business models.

In addition, the "M&A Fund," which supports business succession for small and medium-sized enterprises, has been selected with a scale of 100 billion won, while the "Scale-up and Mid-sized Leap Fund," which supports scale-up investments for ventures and startups, has also been selected with a scale of 100 billion won. The "Youth Startup Fund" (66.8 billion won), "Women Entrepreneurs Fund" (20 billion won), and "Restart Fund" (52.9 billion won) have also been selected to continue supplying seed capital to policy-priority areas that require nurturing.

This investment initiative also newly applies institutional improvements designed to ensure that venture capital firms can fulfill their original role of risk-taking investment even in difficult times. Operating companies that actively invest in non-metropolitan areas and early-stage investments were given preferential selection, thereby strengthening incentives for regional and early-stage investments. As a result, more than half of the incentive-targeted funds have set mandatory investment requirements, so funds other than those exclusively for regional or startup early-stage investments are also expected to invest at least 86.2 billion won in regional companies and at least 52.3 billion won in early-stage startups.

Additionally, to promote a virtuous cycle from investment to exit and reinvestment, for two years starting this year, up to 20% of investments in existing shares will be temporarily recognized as primary investment, and investments in non-metropolitan areas will be recognized at 120% of their value as primary investment. The impairment loss guidelines, which serve as the basis for management fee payments, have also been revised to be more market-friendly and to support challenging investments such as early-stage ventures. For companies less than five years old, where generating revenue is difficult, management fees will not be reduced even if financial statements deteriorate after investment. For other companies, if business improvement is expected, management fee reductions may be deferred with the review of an auditor.

Minister of SMEs and Startups Oh Youngju stated, "Last year, the scale of venture investment in Korea succeeded in rebounding for the first time since 2021, continuing to grow steadily despite challenging global market conditions. If the 700 billion won-scale venture funds selected through this investment initiative are formed quickly and begin investing in earnest in the second half of the year, we expect this will further support the ongoing recovery."