Korea’s policy finance system is entering a new phase of scale and precision. The Korea Development Bank (KDB) has launched the ₩7.45 trillion National Growth Fund for 2026, marking one of the nation’s most significant funding initiatives to date for semiconductors, artificial intelligence (AI), and deep tech. The plan aims to anchor patient capital in sectors that will define Korea’s industrial competitiveness over the next two decades.
KDB Begins Fund Manager Selection for 2026 National Growth Fund
On January 15, the Korea Development Bank (KDB) announced its plan to select management firms for four financial parent funds under the 2026 National Growth Fund, totaling KRW 7.45 trillion (approx. USD 5.6 billion).
The initiative will be implemented through indirect investment, with selected fund managers matching government contributions with private capital to form subsidiary (sub-) funds. KDB’s goal is to mobilize private participation at scale while directing capital toward strategic and future-oriented industries.
Four main categories will compose the fund:
- Policy-Based Fund (Industrial Support)
- Policy-Based Fund (Focused Support)
- Ultra-Long-Term Technology Investment Fund
- Public Participation Fund
One management company will be appointed to operate each category.
Policy and Strategic Focus: Deep Tech, AI, and Scale-Up Ventures
The Policy-Based Funds account for the largest portion, targeting a combined KRW 3.8 trillion in sub-funds.
The Industrial Support Fund will commit KRW 2.4 trillion, including KRW 160 billion in government seed capital, to invest in small and mid-sized enterprises (SMEs) in advanced strategic sectors such as semiconductors, AI, and next-generation manufacturing. Its mandate emphasizes broad-scale support to strengthen global technology competitiveness.
The Focused Support Fund will invest KRW 2.2 trillion, with KRW 90 billion in government capital, to form a KRW 1.2 trillion sub-fund divided into:
- Scale-up Fund (KRW 500 billion) – to help mid-tier companies valued above KRW 100 billion expand globally.
- AI and Semiconductor Fund (KRW 500 billion) – to reinforce Korea’s competitive edge in two high-priority strategic industries.
- Regional Investment Fund (KRW 200 billion) – to boost local innovation ecosystems beyond the capital region.
Deep Tech and Public Participation: Building Long-Term National Growth Capital
A defining feature of this initiative is the Ultra-Long-Term Technology Investment Fund, which targets deep tech ventures with long R&D cycles.
This fund will total KRW 880 billion, combining KRW 80 billion in government contributions with KRW 600 billion in total capital. It will operate for up to 20 years, providing patient funding to help technology startups and research-driven firms commercialize innovations without premature pressure for returns.
Complementing this is a KRW 720 billion Public Participation Fund, designed to allow citizens to share in the benefits of Korea’s high-tech industrial growth. The fund aligns with the government’s effort to expand investment inclusivity while channeling capital toward the future economy.
Qualification and Selection Timeline
Eligible applicants must be licensed under Korea’s Capital Markets Act to manage private collective investment schemes and have at least KRW 1 trillion in assets under management (AUM) as of the end of 2025.
Proposals are due by February 5, 2026, and KDB will evaluate firms based on their operational history, personnel expertise, and fund management plans. Final selections are scheduled for March 2026.
Chosen managers will be responsible for fund setup, sub-fund operator selection, investment execution, and post-investment oversight.
A Structural Leap in Korea’s Venture Finance Model
The National Growth Fund represents a critical evolution in Korea’s policy-based venture finance. Unlike earlier government-backed vehicles focused on volume and short-term deployment, this framework emphasizes long-term deep tech commercialization and strategic industry resilience.
It aligns with Korea’s broader industrial policy direction, which centers on securing supply chain autonomy, scaling AI and semiconductor capabilities, and nurturing globally competitive deep tech startups.
By combining government seed funding with private-sector capital, KDB is signaling a model shift—from short-horizon stimulus to structural innovation finance. This approach also positions Korea as a regional benchmark for Asia-Pacific policy venture ecosystems, particularly in the intersection of public capital and technology-driven enterprise growth.
Korea’s Deep Tech Era Demands Patient Capital
The KRW 7.5 trillion National Growth Fund embodies Korea’s recognition that frontier technologies require more than venture momentum—they require endurance.
With 20-year capital horizons, coordinated fund-of-funds structures, and explicit targets for AI, semiconductors, and regional scale-ups, the initiative stands as a policy blueprint for sustainable industrial innovation.
Now, for founders, it signals a new pathway to access long-term capital. Meanwhile for investors, it redefines Korea’s role as one of Asia’s most sophisticated deep tech financing hubs.
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