The Ministry of Small and Medium-sized enterprises (SMEs) and Startups (MSS) in South Korea said it will invest around KRW 1 trillion ($748.43 million) in a fund of funds this year to boost the venture capital sector in the country.

MSS said in a statement the fund will induce the raising of feeder funds exceeding KRW 2 trillion ($1.49 billion) and the MSS currently applies full-scale incentives, such as management and performance fees, to encourage venture capital firms to promptly execute an investment surplus of around KRW 11 trillion ($8.23 billion) as of the end of 2022.

The MSS is planning to enhance its research and development (R&D) support in the deep tech field through the Super Startup 1000+ project, etc. and actively help ventures/startups in cutting-edge fields grow and enter the global market by pursuing bold regulatory innovations, such as introducing global innovation special zones, and increasing the global fund raised.

The MSS is improving relevant laws, systems, and infrastructure to provide support for South Korean startups that are advancing and growing abroad, while developing various policies with the watchword ‘Startup Korea’ so foreign talent can freely start their businesses in South Korea.

The MSS and the Financial Services Commission in South Korea are also preparing a plan to improve the financing environment for ventures/startups and improve their competitiveness through provision of additional funds and
regulatory innovation.

YOON Gun-soo, the Chairman of Korean Venture Capital Association (KVCA), said the current contraction of the investment market has been caused by economic uncertainty rather than lack of investment resources and it is a global phenomenon.

He said the government needs to actively support companies with high growth potential, such as companies in new growth industries, and overcoming the crisis in the venture/startup ecosystem requires facilitating the entry of ventures and startups to the global market, providing support for deep technology development and regulatory innovation.

YOON also said that it is necessary to boost early-stage investment and increase the fund of funds for small venture capital firms.

YOON stressed that most of all, venture capital firms and ventures, both the main players in the venture/startup ecosystem, should do their utmost to discover outstanding companies and flexibly respond to the market situation in order to overcome the current crisis.

MSS Minister LEE Young said as this crisis is a global phenomenon and overcoming the crisis in a short time period is the key to enhancing economic competitiveness, the government and the private sector need to take this as an opportunity to strengthen the venture/startup ecosystem and collaborate in making an all-out effort to invigorate the ecosystem.

She said the agency is planning to use all the capabilities of the MSS to help the innovative venture industry overcome the combined crises it is facing, while invigorating the venture/startup ecosystem.

According to her, the amount of venture funds raised and venture investment performance in the first quarter decreased by 78.6 percent and 60.3 percent, respectively, from the same period of the previous year.

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