The Ministry of SMEs and Startups and Korea Venture Investment Corp. announced on August 13 that they held the launch ceremony for the 'LP (Limited Partner) Growth Fund' and the 'Third Quarter Fund of Funds Policy Forum' at the Startup Venture Campus (SVC) in Seogyo-dong, Seoul.
The LP Growth Fund is an investment platform designed to facilitate participation from various investment institutions in venture capital. It is jointly established by pension funds, financial institutions, industry, and the government.
The government has structured a two-track investment program through self-funds or master funds, providing benefits such as priority loss coverage and put options to encourage diverse private investment institutions to engage in venture capital.
This LP Growth Fund marks a significant step for the Fund of Funds to evolve into a 'next-generation venture investment platform' that attracts new investors and expands pension fund contributions. Among the 18 participating institutions, five are entering venture capital investments for the first time through this fund.
Typically, the government’s contribution ratio is around 60%, but it has been reduced to 20% in this case, enhancing the multiplier effect of government finances by more than five times. A total of 510 billion won will be raised for the 1 trillion won venture fund, with 340 billion won from the private sector and 170 billion won from the Fund of Funds.
The Ministry plans to focus the fund on strategic industries. It will create a specialized defense fund worth 110 billion won in collaboration with a consortium of the Export-Import Bank of Korea and BNK Financial Group. Additionally, a 250 billion won open innovation fund will be launched, involving companies such as Naver, Hyosung, GS, Seonik Systems, Far East Logistics Group, and Taehwa Group, focusing on artificial intelligence (AI), beauty, bio, and defense sectors.
The first investment project will be announced on August 14, and the selection of fund managers is expected to proceed within the fourth quarter.
Following the fund launch ceremony, the policy forum addressed the prerequisites for private investors to incorporate venture capital as a key component of long-term asset allocation.
Acting Minister of SMEs and Startups No Yong-seok stated, "The government must prepare for the era of Fund of Funds 2.0, where national capital flows into venture capital, moving beyond just being a provider of initial funding. We will strengthen the role of the Fund of Funds as a next-generation venture investment platform through this fund launch."
* This article has been translated by AI.
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