The Ministry of SMEs and Startups(MSS) of South Korea officially launched the “Startup Korea Fund” at a ceremony held at Hotel Naru Seoul MGallery, with the investors contributing to the fund. In August last year, at a meeting chaired by the President, the government announced its “Startup Korea” strategy, aimed at making ventures and startups a driving force of the Korean economy. As part of this strategy, the government and private sector plan to raise at least KRW 2 trillion over four years (2024-2027).

The “Startup Korea Fund” is a landmark fund created through the collaboration of large corporations, financial institutions, SMEs, and the government. Its goal is to encourage more aggressive venture capital investments by offering extraordinary incentives, such as coverage for initial losses, additional credit in co-prosperity assessments, and government awards. This approach reduces the proportion of government funding while increasing the share of private capital, effectively doubling the fund’s capacity to attract private investment.

Typically, a Fund of Funds is funded with about 60% government capital, but the “Startup Korea Fund” has a different structure, with the government contributing 30% and the private sector providing 70% (40% from private investors and 30% from additional venture capital investments).

In its inaugural year, 2024, 21 private investors will contribute over KRW 300 billion, with more than KRW 200 billion from the government, resulting in a total investment of over KRW 500 billion. This combined investment will allow the creation of venture funds totaling around KRW 800 billion, focusing on startups with innovative technologies that target global markets.

The 21 investors in the fund include Hyosung (the holding company, T&C, and Heavy Industries), Samsung Life, Samsung Fire & Marine Insurance, LG Uplus, Hanwha TotalEnergies, Samchully, Kakao Mobility, Industrial Bank of Korea, KB Kookmin Bank, Yellow Umbrella Mutual Aid Fund, Doowon Heavy Industrial, LF, NPC, Chong Kun Dang Holdings, KC, Shinseong Delta Tech, MAPAL HiTECO, Shinhan Diamond Industrial, and Viva Republica.

Of these, seven companies, including Hanwha TotalEnergies and Kakao Mobility, are participating in a venture fund for the first time through the “Startup Korea Fund.” The rest have significantly increased their contributions compared to 2023.

The “Startup Korea Fund” plans to focus on three key areas: super-gap technology, secondary markets, and global expansion, to create additional sub-funds.

Oh Young-joo, the Minister of MSS, remarked, “The ‘Startup Korea Fund’ is designed to encourage more aggressive venture capital investments, with the government absorbing initial losses while the private sector reaps the profits.” She added, “I expect this fund to become the most successful venture fund yet, allowing more companies and financial institutions to invest in Korean ventures and startups with confidence and enthusiasm.”

The “Startup Korea Fund” was launched with this ceremony, and it will announce its investment project in May. The fund is expected to start selecting managers and formally creating the fund in the second half of this year.