South Korea Launches Startup Fund to Supercharge Venture Investments

On Wednesday, South Korea’s Ministry of SMEs and Startups unveiled a startup fund to strengthen venture investments. The initiative, named the Startup Korea Fund, emerged from a collaboration between the government and various entities such as large corporations, financial institutions, and small to medium-sized enterprises.

The ministry plans to attract private capital into the venture ecosystem through this. Alongside the establishment of the Startup Korea Fund, another development is the emergence of the Hana Super Gap Mutual Growth Indirect Fund, a private fund spearheaded by the Ministry of SMEs and Startups that has garnered attention from the venture investment sector.

The Startup Korea Fund was launched at Hotel Naru Seoul MGallery in Mapo-gu, Seoul, on the 24th. Unlike typical arrangements where government entities contribute around 60% of the funding, the Startup Korea Fund operates on a unique structure with only 30% government funding for greater involvement from the private sector. 

This shift aims to incentivize more aggressive venture investments from private entities by providing enhanced benefits such as priority loss coverage, co-growth evaluation bonuses, and government awards.

The fund’s establishment follows the “Startup Korea Strategy Meeting” With President chairing it in August last year, highlighting a concerted effort between the government, large corporations, financial institutions, and small to medium-sized enterprises to advance the startup ecosystem.

This year, a consortium of 21 private investors, including major corporations like Hanwha TotalEnergies Petrochemical Co. and Kakao Mobility Corp., is set to inject over 300 billion won into the Startup Korea Fund. 

Complemented by the government’s contribution of over 200 billion won, the fund is slated to amass more than 500 billion won in combined public-private investments. The fund aims to raise and allocate approximately 800 billion won to fuel startup initiatives. 

The Ministry of SMEs and Startups plans to unveil the investment project within the coming month, with plans to commence fundraising efforts earnestly in the latter half of the year. With a target of surpassing 2 trillion won by 2027, the Startup Korea Fund is gearing up to establish itself as a catalyst for economic growth and technological advancement in South Korea.

Minister of SMEs and Startups Oh Young-ju expressed high hopes for the Startup Korea Fund, foreseeing it as an initiative that will facilitate increased participation from companies and financial institutions in South Korea’s vibrant venture and startup ecosystem. 

In March, Hana Ventures announced an investment project worth 20 billion won, kickstarting a wave of enthusiasm among venture capitalists. The league, comprising the Rookie League and the General League, witnessed fierce competition as numerous consignment managers vied for participation. 

Notable venture capital firms such as SNS Investment, Kolon Investment, and TS Investment stepped up to the challenge, underscoring the industry’s keen interest in the fund’s potential to drive growth and innovation.

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