[Public Voices]Dreaming of a Soaring 2026 Like the "Red Horse": The Venture Ecosystem's Race Ahead

"Productive Finance Transformation"... Much-Needed Relief Amid the Investment Winter
Regret Over the Budget Cut for the "Priming Investment" Fund of Funds
Banking Sector's Risk-Weighted Asset (RWA) Regulations Also Need Easing

Hakkyun Kim, Chairman of the Korea Venture Capital Association

A tumultuous year is coming to an end. This year, both Korea and the United States saw the inauguration of new administrations, causing domestic and international environments to fluctuate more than ever before. The venture investment industry also experienced a hectic period amid macroeconomic uncertainties.

Fortunately, the government's commitment to revitalizing the venture ecosystem was stronger than ever. In particular, the "Productive Finance Transformation" policy served as much-needed relief during the investment winter. The signal to create a private sector-led capital flow and ensure smooth funding for innovative companies raised expectations in the market.

However, as the year comes to a close, it is regrettable that many long-standing issues in the industry remain unresolved. Among these, the most disappointing is the budget cut for the Fund of Funds.

The government initially presented an ambitious plan to foster a 40 trillion won annual venture investment market and ignite a "third venture boom" by significantly expanding the Fund of Funds budget to 1.1 trillion won. However, during the National Assembly’s budget review process, this amount was reduced to 820 billion won, leaving much to be desired.

While no government budget item can be taken lightly, the Fund of Funds is directly linked to the nation’s future growth engine and must be handled with policy consistency and careful consideration. If the Fund of Funds budget is reduced, private capital that planned to match investments based on this trust will also shrink, leading to a smaller fund formation for the year. This, in turn, results in a funding gap when full-scale investments are executed two to three years later.

Companies that could have successfully grown and driven the national economy may fail to receive timely investments, fall into the "valley of death," and disappear from the market. This could lead to a national loss.

Just as education, which nurtures the nation's workforce, is called a "hundred-year grand plan," nurturing innovative companies that will drive economic growth with a long-term perspective is also a national responsibility. With 356,000 jobs and 258 trillion won in sales created by venture companies surpassing those of major conglomerates, the Korean economy is already based on the venture ecosystem. The priming investment for these companies must not be scaled back.

The upcoming year, 2026, is the Year of the Red Horse (Byeongo Year). For our venture ecosystem to stretch out and gallop like a flying horse, we must provide a wide field for it to run.

To this end, I propose that the government and the National Assembly address two key issues next year.

First, the bold expansion of the Fund of Funds budget. As private investment shrinks, the role of policy finance becomes absolutely critical. The Fund of Funds is not merely a grant, but an anchor that attracts private capital to the market. It is necessary to consider supplementing the reduced budget through an additional budget allocation to reaffirm policy commitment to the market.

Second, the relaxation of the banking sector's Risk-Weighted Assets (RWA) regulations. The Fund of Funds alone has its limits. To build the fundamental strength of the venture investment ecosystem, private capital-especially the abundant liquidity in the financial sector-must flow in. Currently, banks are hesitant to invest due to the high risk weights applied to venture fund investments. For capital in the market to flow into innovative companies, a rational adjustment that matches reality is required.

Horses run forward without looking back. Likewise, the Korean venture capital industry is ready to run toward the future without fear of failure. I sincerely hope that next year, the National Assembly and the government will provide the "two wings" of budget expansion and regulatory improvement, so that Korea's venture ecosystem can soar to new heights.