The Korean government has unveiled an ambitious new initiative aimed at turbocharging the country’s burgeoning startup ecosystem. Dubbed the “Startup Korea Fund”, it represents a landmark public-private partnership designed to unlock billions in fresh venture capital.
Under the scheme, 21 corporations and financial institutions will pool over 300 billion won to invest alongside 200 billion won from government coffers. This combined 500 billion won war chest will be deployed to back promising local startups. Plans call for increasing the total fund size to a sizable 800 billion won going forward.
What makes the program truly innovative is its emphasis on crowding in private capital. Typically, most state-backed VC vehicles allocate 60% of funds from taxpayers. But Startup Korea Fund inverts this, with 70% private money and just 30% public financing. Further sweetening the pot are incentives like loss coverage and performance bonuses to really get corporations leaning in.
Seven major players like Hanwha and Kakao will also participate in VC investing for the first time thanks to this program. The expectation is that with such generous co-investment terms on offer, ever larger sums can be unlocked from risk-averse but deep-pocketed companies.
If successful, it would cement Korea’s status as Asia’s premier startup hub. According to the Minister, nothing before has matched the potential for this effort to supercharge local ventures. Plans are in motion to have investment operations in full swing by mid-2024 after projects are selected next May. With bold ambitions and market-leading design, Startup Korea Fund seems primed to fuel the next wave of innovation.