Government to Create 4.4 Trillion Won Venture Funds with 2.1 Trillion Won Fund of Funds Investment

Announcement of the '2026 First Regular Fund-of-Funds Investment'

The government has announced plans to create venture funds totaling 4.4 trillion won by supplying 2.1 trillion won in capital through contributions from the Korea Fund of Funds.

On January 23, the Ministry of SMEs and Startups, together with the Ministry of Culture, Sports and Tourism, the Ministry of Oceans and Fisheries, and Korea Venture Investment Corp., issued the "2026 First Regular Fund of Funds Investment Announcement" and revealed these plans.

The Ministry of SMEs and Startups will contribute 1.6 trillion won across 13 sectors to create venture funds exceeding 3.6 trillion won. In particular, 550 billion won will be allocated to the "Next-Generation Unicorn Fostering Project," which will focus investments on each stage of corporate growth to nurture artificial intelligence (AI) and deep tech unicorns, supporting a total fund size of 1.3 trillion won.

Additionally, the ministry will add 740 billion won to the "Startup" and "Scaling Up" funds, which were first launched through the second supplementary budget last year, to support everything from discovering and nurturing promising startups to scaling up investments of 10 billion won or more. The ministry will also establish a new "Unicorn" fund, providing over 60 billion won in joint public-private investment and loans to unicorn candidate companies, with more than 300 billion won in support for around five companies. Furthermore, a new "Overseas Expansion" fund will be created with over 250 billion won to help Korean startups globalize by leveraging large-scale investments from overseas venture capital firms.

The "Regional Growth Fund," designed to support the emergence of the first unicorns in local regions, will receive a record 230 billion won in contributions. Starting this year, the government plans to create at least 400 billion won in parent funds and 700 billion won in sub-funds annually in about four regions, aiming to establish sub-funds totaling more than 3.5 trillion won over five years. The "Global Fund," which supports overseas investment attraction for domestic startups, will receive 130 billion won to create a fund exceeding 1 trillion won. Notably, a global parent fund will be established in Singapore in the second half of this year, and by 2027, a fund totaling 200 million dollars will be operated, with the Korea Fund of Funds taking the lead in attracting global investment capital into the domestic venture investment market.

In response to the recent contraction in early-stage investment, the scale of contributions to early-stage startup funds will be doubled compared to the previous year, creating dedicated funds of over 325 billion won. Half of these funds will be operated as the "Rookie League," targeting new and small venture capital firms and startup accelerators. The "Second Challenge Fund" will also see its contribution scale quadrupled from the previous year, reaching 200 billion won.

The scale of contributions to activate the exit market, which has been a challenge discussed within the venture investment industry, will also be quadrupled compared to last year. A secondary fund of 200 billion won will be created to acquire either existing shares of invested companies or limited partner (LP) interests in venture funds. The business succession M&A fund, which supports mergers and acquisitions focused on small and medium-sized enterprise succession, will be established again this year at a scale of 100 billion won.

The Ministry of Culture, Sports and Tourism will contribute a total of 499 billion won to create an IP fund of 200 billion won, a culture technology (CT) fund of 100 billion won, and a Korean film main investment fund of 56.7 billion won, for a total fund size of 731.8 billion won. The Ministry of Oceans and Fisheries will contribute 15 billion won to create a "Marine Living Zone Specialized Fund" totaling 21.5 billion won.

All major recent policy improvements will be applied to this first regular investment program. To stimulate venture investment outside the Seoul metropolitan area, the Ministry of SMEs and Startups will require that 20% of investments in general sub-funds from the Korea Fund of Funds be allocated to regional investments, and will give preference to funds proposing additional regional investment obligations. The rate of additional performance-based compensation paid to fund managers will also be increased based on regional and early-stage investment results. A special provision recognizing the purchase of existing shares as a primary investment objective will also be applied to this announcement to further support the activation of the exit market.