A legal basis has been established for all statutory funds existing under the National Finance Act to participate in venture investment and venture fund contributions.
With the passage of the amendment to the Act on Promotion of Venture Investment (Venture Investment Act) in the National Assembly, the number of statutory funds eligible for investment has been significantly expanded from 44 to 67. This measure significantly expands the funding sources needed to achieve the government's KRW 40 trillion goal for venture investment, and is expected to signal a new liquidity injection into the venture ecosystem, which has struggled to secure funding.
The core of this amendment is the expansion of the scope of funds eligible to invest in venture companies or venture funds to all funds under the National Finance Act. Previously, only 44 funds were permitted to participate in venture investment under the statutory framework, but this measure removes this restriction. The newly added funds include 23 funds, including the Public Funds Repayment Fund, Lottery Fund, Radioactive Waste Management Fund, Small Business Market Promotion Fund, and National Property Management Fund. In effect, all available statutory funds are now eligible for venture investment.
This legal revision reflects long-standing demands from the venture and startup industries. Related organizations, including the Korea Venture Business Association, have consistently advocated for mandatory investment by statutory funds to revitalize the venture ecosystem. While the amendment does not include the mandatory investment provision the industry had hoped for, it does provide institutional mechanisms to address this need. A new clause explicitly states that the Minister of SMEs and Startups has the authority to request fund management entities to invest in venture capital associations, and requires the requested entity to actively cooperate unless there are special circumstances.
From an industrial perspective, this measure is seen as a significant turning point in addressing the shortage of liquidity providers (LPs) for venture funds. The Ministry of SMEs and Startups has already established the "LP First Step Fund" and is actively attracting statutory funds that have not previously participated in venture investment. These policy efforts, combined with the establishment of a legal basis, are expected to further accelerate the influx of public funds into the venture market.
In fact, the Trade Insurance Fund led this trend in August, prior to the legal revision, by deciding to invest KRW 20 billion in its first venture fund. This was the first such investment since the introduction of the pension fund investment pool system in 2001. The KRW 20 billion from the Trade Insurance Fund was matched with KRW 20 billion from the Mother Fund to create a KRW 40 billion mother fund, with a final KRW 57 billion sub-fund expected to be established. With this revision clarifying the investment basis for the entire fund, it is expected that other funds will follow suit, similar to the Trade Insurance Fund.
Ultimately, this revision to the Venture Investment Act will serve as a foundation for easing startup funding difficulties and supporting scale-up by diversifying liquidity supply channels. With the government's authority to proactively request investment now legally enforced, attention is focused on whether this will encourage conservatively managed funds to expand their portfolios to include venture investment, a new asset class.