The "SME Fund of Funds" That Fostered Three Unicorns... Expanding the Regional Investment Platform

3.3 Trillion Won in Venture Funds Created Last Year
This Year: Scaling Up and Expanding Regional Incentives
New Fund of Funds Operating Committee to Systematize Management

On January 20, the Ministry of SMEs and Startups held the "2026 Fund of Funds Investment Strategy Committee" to review last year's Fund of Funds management performance and to discuss this year's investment plans and future development directions.

The Fund of Funds Investment Strategy Committee was established in 2024 to create a system for gathering opinions from industry professionals and experts during the process of setting management strategies and key investment areas for the Fund of Funds. This aims to promote more market-friendly management of the Fund of Funds. Before announcing investment plans, both the public and private sectors discuss the Fund of Funds' investment direction together. The committee meeting was attended by Hansung Sook, Minister of SMEs and Startups, Byungjun Song, Chairman of the Korea Venture Business Association, Hakkyun Kim, Chairman of the Korea Venture Capital Association, Changhwa Lee, Executive Director of the Korea Financial Investment Association, and experts in key investment areas such as artificial intelligence (AI), biotechnology, and global ventures.

Hansung Sook, Minister of SMEs and Startups, is delivering a greeting at the '2026 Fund of Funds Investment Strategy Committee' held in Seoul on the 20th. Ministry of SMEs and Startups

Last year, the Ministry of SMEs and Startups invested a total of 1.3 trillion won in the Fund of Funds, which led to the creation of 3.3 trillion won in venture funds. Among the portfolio companies of the sub-funds invested by the Fund of Funds, three unicorn companies (FuriosaAI, Vinau, and Galaxy Corporation) emerged in 2025. In addition, 74% of the companies listed on KOSDAQ in 2025 were portfolio companies of the Fund of Funds, demonstrating the Fund of Funds' pivotal role in nurturing unicorns and supporting the growth of innovative companies.

The annual average internal rate of return (IRR) for the Fund of Funds' sub-funds liquidated last year was 7.5%, similar to the cumulative average of 8.0%. Due to the liquidation of a large number of funds in sectors with traditionally low investment activity (such as culture, film, and angel funds), the IRR excluding these sectors was 9.3%. Notably, regional funds that were liquidated recorded an even higher IRR of 9.7%.

In 2026, the Ministry of SMEs and Startups plans to invest a total of 1.6 trillion won in the Fund of Funds to strengthen its role as a venture investment platform and foster AI and deep-tech unicorns. In particular, the goal is to create more than 2 trillion won in parent funds and 3.5 trillion won in sub-funds for regional growth funds over the next five years. The ministry plans to establish at least one parent fund in each of the 14 non-metropolitan cities and provinces within five years, thereby expanding regional venture parent funds nationwide. It also plans to set up an operating committee for each parent fund with community participation and to provide incentives for investors and regional fund managers.

Participants at the meeting discussed ways to enhance transparency, efficiency, and stability in line with the increased scale and expanded role of the Fund of Funds. First, a disclosure system for the Fund of Funds will be introduced to systematically release information on management status and performance. The aim is to increase trust in the management of policy funds and improve perceptions of the venture investment market, thereby encouraging more private capital inflow.

In addition, a new "Fund of Funds Operating Committee" will be established, involving all ministries that provide investments and private sector experts, to set efficient investment directions at the inter-ministerial level. To ensure the Fund of Funds can operate in a stable and long-term manner, procedures will also be put in place to extend its duration and clarify the grounds for reinvestment.

Minister Hansung Sook stated, "Over the past 20 years, the Fund of Funds has played a crucial role in discovering promising ventures and startups, nurturing them into unicorns, and helping Korea's venture investment market grow into one of the top five markets in the world. We will further strengthen our sense of responsibility for the expanded scale and role, and enhance our function as a venture investment platform to support the leap toward a 40 trillion won annual venture investment market."