The Ministry of SMEs and Startups (MSS) announced a massive $230 million (KRW 310 billion) investment commitment through its second regular fund of funds (FOFs) program, aimed at creating venture capital funds worth approximately $425 million (KRW 570 billion).

The landmark investment, led by Minister OH Youngju, represents South Korea’s most ambitious push yet to develop AI and deep-tech unicorns capable of competing on the global stage. The centerpiece of this initiative is the newly launched ‘NEXT UNICORN Project,’ which will receive $223 million (KRW 300 billion) through the country’s second supplementary budget for 2025. This dedicated program marks a strategic shift from fragmented, small-scale investments toward large-scale, concentrated funding tailored to each stage of company growth.

The program operates through two distinct funding mechanisms. The startup fund provides early-stage investment support for startups founded by skilled professionals in AI and deep-tech sectors, while the scale-up fund supports investments exceeding $7.4 million (KRW 10 billion) per company for small and medium-sized enterprises in these sectors. The scale-up fund will prioritize companies selected for the ‘NEXT UNICORN Pool’ – a curated group of high-performing companies recommended by public institutions from among participants in MSS support programs.

Beyond the flagship program, the ministry has allocated $7.4 million (KRW 10 billion) to the early-stage small fund sector, which will form a venture capital fund worth $12.4 million (KRW 16.7 billion). This builds upon the first regular investment project launched earlier this year, where MSS committed $74 million (KRW 99.5 billion) to the early-stage sector, currently forming venture capital funds worth $126 million (KRW 169.9 billion).

KIM Bong-deok, Director General for Venture Policy at MSS, emphasized the urgency behind these investments in the face of intensifying global competition. “As the global competition for technological dominance in AI and deep tech accelerates, investment in AI and deep-tech ventures must be significantly expanded for domestic ventures and startups to grow into unicorns that lead the global market,” Kim stated. He added that the ministry plans to “swiftly carry out the investment project to ensure that the ‘NEXT UNICORN Project’ leads to actual investments quickly, and continue to expand FOFs investment in the AI and deep-tech sectors going forward.”

Applications for the second regular FOFs investment project will be accepted until Friday, August 1, with final selection of fund managers scheduled for September. Fund managers who commit to early fund formation will receive preferential consideration to ensure fund formation and investment begin within the year. This initiative represents South Korea’s determination to position itself as a global leader in AI and deep-tech innovation, providing the substantial capital necessary for domestic startups to scale into billion-dollar unicorn companies.