To expand its venture capital industry, South Korea to invest $748 M in fund of funds this year

In order to strengthen the venture capital industry in the nation, the Ministry of Small and Medium-sized Enterprises (SMEs) and Startups (MSS) of South Korea announced that it will invest approximately KRW 1 trillion ($748.43 million) in a fund of funds this year.

According to a statement from the MSS, the fund will encourage the raising of feeder funds exceeding KRW 2 trillion ($1.49 billion). The MSS also said that it is currently using full-scale incentives, such as management and performance fees, to entice venture capital firms to promptly execute an investment surplus of approximately KRW 11 trillion ($8.23 billion) by the end of 2022.

Through initiatives like the Super Startup 1000+ project and other bold regulatory innovations like the creation of global innovation special zones and an increase in the amount of money raised globally, the MSS intends to improve its research and development (R&D) support in the deep tech sector.

The MSS is developing various policies under the banner of “Startup Korea” so that foreign entrepreneurs can freely launch their businesses in South Korea while also improving pertinent laws, systems, and infrastructure to support South Korean startups that are developing and expanding abroad.

Through the provision of additional funding and regulatory innovation, the MSS and the Financial Services Commission in South Korea are also developing a plan to enhance the financing environment for ventures and startups and increase their competitiveness.

The current contraction of the investment market, according to YOON Gun-soo, Chairman of the Korean Venture Capital Association (KVCA), is a global phenomenon and has more to do with economic uncertainty than a lack of investment resources.

He stated that in order to overcome the crisis in the venture/startup ecosystem, it is necessary to facilitate ventures’ and startups’ entry into the global market, as well as to support both deep technological development and regulatory innovation. He went on to say that the government needs to actively support businesses with high growth potential, such as those in new growth industries.

Additionally, YOON stated that it is essential to increase the fund of funds for small venture capital firms as well as early-stage investments.

YOON emphasized that in order to get out of the current crisis, venture capital firms and ventures, the two major players in the venture/startup ecosystem, must exert every effort to find exceptional companies and adapt quickly to changing market conditions.

In order to increase economic competitiveness, MSS Minister LEE Young stated that the government and the private sector must seize this opportunity to strengthen the venture/startup ecosystem and work together to make a concerted effort to revitalize the ecosystem. The crisis is a global phenomenon, and resolving it quickly is the key to doing so.

The agency, according to her, intends to make full use of the MSS to support the venture/startup ecosystem while assisting the innovative venture industry in overcoming its current crises.

She claims that when compared to the same quarter last year, the amount of venture capital raised and the performance of venture investment fell by 78.6% and 60.3%, respectively.