The South Korean government announced on October 2 its “Advanced Venture Investment Market Leap Strategy,” aimed at boosting the global expansion of its venture and startup ecosystem. 

The plan targets the creation of $12 billion (16 trillion KRW) in venture investments by 2027 and aims to attract $740 million (1 trillion KRW) in global funding. To achieve this, the government will establish a global fund-of-funds, “K-VCC,” in Singapore, while also working to broaden the participation of financial institutions and large corporations.

With private deep-tech companies like OpenAI and SpaceX becoming key players in global innovation, many countries are focusing heavily on nurturing their venture investment markets. Interest in Korea’s startup ecosystem has also surged, particularly after Korean startups won the highest number of “Best of Innovation” awards at CES 2024.

The Korean government’s goal is to create an environment where startups can easily secure both domestic and international venture funding, enabling them to grow and expand into global markets. Over the past 15 years (2008–2023), Korea’s venture investment market has grown at an average annual rate of 16%, outperforming the global average of 13%. It has also delivered strong returns, with an average annual profit rate of 9%.

However, challenges remain, such as the relatively low proportion of global investment, which currently accounts for just 2% of total funding, and a market largely driven by a small group of investors, including government-backed funds. 

This new initiative builds on the “Startup Korea Initiative” (announced in August 2023) and aims to elevate Korea’s venture investment market to meet global standards, attracting both international and domestic private investors.

The plan aims to grow Korea’s venture investment market to a record $12 billion (16 trillion KRW) by 2027, while also increasing global investment from $148 million (200 billion KRW) in 2023 to $740 million (1 trillion KRW) by the same year.

To attract global capital into Korea’s venture market, the government will set up the K-VCC fund-of-funds in Singapore. This platform will help Korean venture capital firms establish global funds at lower costs and attract international investors. The goal is to raise $200 million in Singapore by 2027, with plans to expand to other financial hubs such as the Middle East and Delaware, USA.

The government also plans to host more international venture investment events, inviting global investors and venture capitalists. Additionally, it will launch a “Global Venture Investment Integrated Reporting Center” to streamline foreign exchange processes for international investors and create joint guidelines with related ministries to simplify administrative procedures.

The initiative also aims to expand the number of participants in Korea’s venture market. To encourage banks to invest more aggressively in ventures, the government will introduce incentives and risk-weight exemptions for venture funds that meet specific policy objectives. Large corporations will also be encouraged to invest in startups through a new “Deep Tech Value-Up Program,” with the government offering matching investments for these ventures through a newly established “Value-Up Fund.”

The government will diversify the venture investment market by introducing new funds that allow institutional investors, including pension funds, to participate. Additionally, the government will offer significant incentives, such as loss compensation and put options, to attract new participants. 

A new fund focused on early-stage startups will be launched, and accelerators will be allowed to provide support across the entire startup lifecycle. The government also plans to create a $100 million global secondary fund by 2025 to support M&A and secondary markets.

Finally, the government will enhance Korea’s venture investment environment to align with global standards by easing regulations on the autonomy of venture investment firms and allowing the separation of investment and management functions—common practices in advanced markets. To increase transparency, the government will conduct performance evaluations of venture firms, regularly publish venture fund returns, and strengthen oversight of the venture investment market.

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Minister of SMEs and Startups Young-Joo Oh emphasized the importance of creating a world-class venture ecosystem, stating, “The rise of startups as key players in global innovation is already recognized and closely watched by the world. This marks the beginning of fierce competition between countries in the startup ecosystem. The government is committed to building a dynamic venture ecosystem that will allow our startups to compete confidently and gain an edge on the global stage.”