South Korea’s Ministry of SMEs and Startups, headed by Minister Lee Young, has announced the selection of a venture fund manager worth 278.7 billion won ($245 million) through the screening of the “2023 Parent Fund (Fund) 1st On-time Investment” project. The fund will support startups in various fields, including youth startups, women’s entrepreneurship, and businesses undergoing reorganization or conversion.
The announcement comes after a significant decline in the venture investment market last year, as domestic and foreign economic conditions rapidly deteriorated. In response, the Ministry of SMEs and Startups announced its 1st regular investment project in 2023 within 10 days after the passage of the 2023 Budget National Assembly in December 2022, with the aim of rapidly forming venture funds and supplying venture investments.
Out of a total of 79 funds that applied for the investment project, only 10 were selected through a deliberation process.The application competition rate based on the amount of investment recorded 7.48:1 (for 10 funds, 79 VCs applied) which is more than twice the level of the previous year (3.45:1). The selection process was highly competitive, as private investors have become more conservative, and demand for investment in parent funds has increased.
The Youth Startup Fund, which supports the startups of young people with innovative ideas, was selected with a scale of 96.7 billion won ($85 million). The fund has also earmarked 36.7 billion won ($32 million) for new or small and medium-sized venture investment companies, as part of the Rookie Competition League.
The Women’s Enterprise Fund, which focuses on investing in startups, was selected with a scale of 26 billion won ($23 million) to promote women’s entrepreneurship and social activities. The Re-Leaping Fund, which invests in companies that have undergone business reorganization or closure, was selected with a scale of 32 billion won ($28 million).
The Materials Parts Equipment Fund, which focuses on investing in excellent companies in the fields of materials, parts, and equipment, was selected with a total of 54 billion won ($48 million). It aims to invest in small but strong companies in materials, parts, and equipment with excellent technology and high growth potential.
In addition, the M&A Fund, which supports mergers and acquisitions of small and medium-sized, start-up, and venture companies, and the revitalization of the middle recovery market, was selected with a scale of 70 billion won ($62 million).
Minister Lee Young stated that “In the midst of still difficult economic conditions at home and abroad, such as the recent bankruptcy of overseas financial institutions, it is an important time for parental fund (fund) investment to become a policy priming and lead institutional investors and private fund (fund) investment.”
“The investment promotion incentives (incentives) prepared in November last year will be fully applied to the selected parent fund (fund). We hope that investment funds will be quickly supplied to venture and startup companies who are having difficulties in raising funds due to a decrease in investor sentiment,” Lee added.
This selection of venture funds will not only boost the startup ecosystem in South Korea but is also expected to create job opportunities and stimulate economic growth. The government’s focus on promoting entrepreneurship and innovation will help create a favorable environment for startups, making it easier for them to access funding and other resources they need to thrive.
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