Venture firms, government create $6.2 billion fund for startups

Korea’s corporate venture capital (CVC) firms and the government will club together to create a 8 trillion-won ($6.2 billion) venture fund for local startups by 2025.

Lee Chang-yang, Minister of Trade, Industry and Energy, speaks during an inauguration ceremony for a corporate venture capital (CVC) alliance consisting of 42 CVC firms at Lotte Hotel in central Seoul, Monday. [MINISTRY OF TRADE, INDUSTRY AND ENERGY]

Korea’s venture investors and the government will band together to create an 8 trillion won ($6.2 billion) venture fund for local startups by 2025.

The announcement was made by the Ministry of Trade, Industry and Energy on Monday during an inauguration ceremony for a corporate venture capital alliance consisting of 42 corporate venture investors including Posco Capital, CJ Investment, GS Ventures and Hyundai Venture Investment.

Of the funds gathered so far, Hyosung Ventures has raised 51 billion won while Lighthouse Combined Investment has pulled together 70 billion won, the ministry announced as it kicked off the public-private fundraising program.

The 42 corporate venture capital firms, which are defined as venture investors backed by larger companies, aim to raise a combined 7 trillion won to establish a venture fund by 2025, while the government will set up a 1 trillion-won policy fund.

The alliance plans to work with the Industry Ministry to drive growth in the local startup scene by tapping into the parent companies’ resources while promoting research and development (R&D) for the smaller companies.

During the Monday event, the alliance members also requested the government lift regulations on venture investments, such as limitations for corporate venture investors on the proportion of external financing and the cap on the overseas investment ratio of the firms.

“The importance of corporate venture investors is growing as a key actor between large- and medium-sized companies and startups, and also between established industries and emerging ones to drive up innovation,” said Lee Chang-yang, Minister of Trade, Industry and Energy, in his celebratory remarks during the event.

The minister promised to expand R&D programs involving corporate venture firms, and actively incorporate investors' feedback during the process of such research projects. “We will soon finalize a plan to ease regulations for corporate venture investors to expand domestic and foreign investment, and work with other government agencies to revise the law,” added Lee.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]