As South Korea wraps up 2025, a new government initiative signals a structural shift in the nation’s venture landscape. The Ministry of SMEs and Startups (MSS) has begun forming a combined KRW 5.5 trillion “Regional Growth Fund,” an ambitious effort to spread venture capital and innovation capacity beyond Seoul. For the next five years, this fund will serve as a cornerstone of Korea’s push for balanced growth and regional unicorn creation.

Government and 14 Regional Authorities Launch ₩5.5T Fund Initiative

The Ministry of SMEs and Startups (MSS) held a Regional Growth Fund Roundtable on December 22 at its Sejong headquarters, joined by officials from 14 non-metropolitan provincial and metropolitan governments. Over 40 representatives attended, including startup and venture division heads and the regional innovation director of Korea Venture Investment Corp. (KVIC).

The meeting formalized discussions between central and local governments following the December 18 announcement of the “Comprehensive Strategy for Advancing Korea into a Global Top 4 Venture Powerhouse.” The Regional Growth Fund, a key component of that national strategy, will channel long-term capital into regional ecosystems through a structured fund-of-funds model.

Korea’s Regional Venture Policy Enters a New Phase

The new fund aims to strengthen regional investment capacity and reduce the heavy concentration of venture activity in the capital region.

The Regional Growth Fund will be jointly financed by the government’s Fund of Funds (Mother Fund), local governments, and private investors. The model will enable capital to flow into regional sub-funds that target startups with local innovation potential.

Over the next five years, the MSS plans to raise KRW 2 trillion in parent funds and KRW 3.5 trillion in sub-funds, totaling KRW 5.5 trillion (approximately USD 4.1 billion). Each of the 14 non-metropolitan regions will host at least one parent fund, establishing local investment anchors to catalyze new growth clusters.

As part of Korea’s long-term regional venture strategy, the Ministry of SMEs and Startups has already supported the establishment of several regional mother funds — including in Chungnam, Busan, Gangwon, and Gyeongbuk — which pool Fund of Funds capital with local and private contributions to back regionally focused sub-funds.

These mother funds align with the policy direction later formalized through the larger Regional Growth Fund strategy outlined in December 2025. Collectively, these funds are designed to expand regional venture sub-fund activity and support the government’s broader goal of mobilizing new capital across non-metropolitan regions through 2030.

The initiative represents a major government-led regional venture capital effort, signaling a clear policy pivot toward spatially balanced innovation and long-term competitiveness.

Balancing the Ecosystem and Building Regional Unicorns with Regional Growth Fund Project

According to Kim Bong-deok, Director-General for Venture Policy at the Ministry of SMEs and Startups:

“We are designing the Regional Growth Fund with two core objectives: achieving balance within Korea’s venture ecosystem and cultivating the first unicorns to emerge from outside the Seoul metropolitan area.”

Kim added that the ministry will continue developing strategies to expand venture capacity across the country, moving beyond the Seoul-centric investment model that has dominated the past decade.

Regional Growth Fund: A Structural Rebalance for Korea’s Venture Future

The Regional Growth Fund marks a decisive move toward national venture decentralization. By empowering regional investors and aligning local governments with national policy, the MSS is positioning Korea’s provinces as active participants in innovation rather than peripheral markets.

If executed effectively, the fund could stimulate new startup pipelines in several provincial and metropolitan areas that have historically struggled to attract venture capital compared to Seoul. For investors, this decentralization offers diversified deal flow and exposure to underdeveloped sectors including advanced manufacturing, green tech, and regional deep-tech initiatives.

Globally, Korea’s initiative mirrors broader Asia-Pacific trends in inclusive innovation policy, where governments seek to distribute venture growth more evenly across cities and industries. The success of this model could serve as a benchmark for cross-border venture funds looking to balance innovation equity and economic resilience.

Regional Venture Renaissance Ahead

The KRW 5.5 trillion combined Regional Growth Fund signals a strategic rebalance for Korea’s innovation economy heading into 2026. Beyond capital allocation, it embodies a shift in mindset, from Seoul-centric scaling to nationwide venture inclusivity.

As the MSS prepares to release the full Regional Growth Fund Establishment Plan early next year, the coming phase will test Korea’s ability to sustain equitable startup growth across its 14 regional economies — and determine how effectively local innovation can fuel the nation’s next generation of global-scale ventures.

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