This article was published on Dec. 12, 2024, at 5:52 p.m. on the Chosun Biz Money Move (MM) website.
The Agricultural Policy Insurance and Finance Center, which manages the Agricultural, Forestry, Fisheries, and Food Fund, has begun research to introduce a private proposal fund. The private proposal fund is a capital project in which private fund operators, such as venture capitalists, autonomously suggest fields for investment, and the mother fund supports private investments.
According to the venture investment industry on the 12th, the Agricultural Policy Insurance and Finance Center has commenced an examination process for introducing the private proposal fund. This is the first time since the launch of the Agricultural, Forestry, Fisheries, and Food Fund this year that an exchange meeting between investors and managers has been held, marking a swift response to expand private investment. The center noted, "This is aimed at establishing the direction of the capital project for the privately proposed fund, which is under review for new introduction next year, and specific evaluation criteria for the private proposal field."
The Agricultural Policy Insurance and Finance Center is reviewing the direction of private proposal fund investments for next year's Agricultural, Forestry, Fisheries, and Food Fund by analyzing the current market status of private proposal funds related to other mother funds. Specifically, the center is deriving areas such as private proposal sectors, fund types, and investment directions. It is also developing quantitative and qualitative evaluation indicators such as financial stability, investment consortium performance, food system expertise, and recovery strategies.
The Agricultural Policy Insurance and Finance Center has been managing the Agricultural, Forestry, Fisheries, and Food Fund for 14 years. Since its first launch in 2010, a total of 2.0224 trillion won (134 funds) have been established, investing 1.4982 trillion won in 777 corporations by October this year. This year, the center is expanding its business by creating new investment accounts for pets and traditional alcohol.
The center appears to feel the need to introduce a private proposal fund as traditional investment areas such as information and communication technology (ICT), biopharmaceuticals and healthcare, and distribution and services become increasingly blurred, leading to diversification and segmentation of investment targets. In particular, the agricultural and food sector is reported to have a steep entry barrier for venture capital due to its unfamiliar investment landscape compared to other industries. In fact, agricultural and food venture investments are classified as 'other' without any separate statistics.
The industry is optimistic about the private proposal fund investment project of the Agricultural, Forestry, Fisheries, and Food Fund. An official from a venture capital firm investing in the agricultural and food sector said, "The agricultural and food sector is directly related to food security and consumer prices, and as opportunities for investment increase due to climate change or international circumstances, it is important to engage. However, there are challenges in actively deploying investment funds due to obstacles in investing in new industry sectors from the mother fund's investment accounts."
Another venture capital official noted, "When looking at the investment fields of the Agricultural, Forestry, Fisheries, and Food Fund, they can be broadly categorized into agriculture, livestock, food, smart agriculture, food technology, and secondary industries, but as industry development accelerates, areas like alternative proteins, precision agriculture, eco-friendly packaging, and biofuels are diversifying. Thus, it is welcome to introduce a method where the private sector proposes investment targets to expand the spectrum of new industry investments."
There are positive voices regarding the bottom-up investment approach compared to past cases. The Ministry of SMEs and Startups announced a private-sector-centered innovation plan for the venture ecosystem in 2018 and introduced private proposal funds. At that time, the ministry adopted a method where the private sector could freely propose investment areas and provide subsequent investments if they met policy objectives.
An official from the industry emphasized, "Typically, after being selected as a management agency for the mother fund's capital project, the process proceeds by matching private funds. After designing high-revenue investment sectors, securing private investors as anchor limited partners, and requesting matching from the mother fund will significantly reduce funding difficulties."