This article was published on Dec. 22, 2024, at 11:53 a.m. on the Chosun Biz Money Move (MM) site.
Korea Development Bank (KDB) has established its second master fund to invigorate local venture investment in South Gyeongsang Province. This comes about six months after it created the 'Busan Future Growth Venture Fund', the first master fund for regional venture investment, in June in Busan. Plans are to start recruiting general partners (GP) for the subsidiary fund in January.
According to the venture capital (VC) industry on the 22nd, Korea Development Bank recently held a general meeting to establish the Gyeongnam Master Fund and formed the 'Gyeongnam KDB Regional Innovation Venture Fund' with a scale of approximately 65 billion won. The bank executed about 30 billion won as an anchor limited partner (LP), with South Gyeongsang Province and local public institutions collectively participating as LPs.
At the end of this month, Korea Development Bank plans to hold a ceremony to establish the Gyeongnam KDB Regional Innovation Venture Fund and announce the fundraising project through Korea Venture Investment in January. Korea Venture Investment, the fund of funds operator, plans to use this master fund to establish a subsidiary fund with a size of at least 125 billion won.
The establishment of the Gyeongnam KDB Regional Innovation Venture Fund was promoted as part of Korea Development Bank's policy to invigorate the regional venture ecosystem. Earlier, it also established a regional venture investment master fund worth 100 billion won in Busan. At that time, Busan City and BNK Busan Bank, a local bank, participated as joint LPs.
The Gyeongnam KDB Regional Innovation Venture Fund is expected to serve as a momentum for the growth of local venture companies. The venture investment market has contracted due to high interest rates and economic recession, which has further intensified the concentration of venture capital in the metropolitan area. According to the Ministry of SMEs and Startups, 80% of this year’s venture investment has concentrated in the metropolitan area.
Interest from VCs is also increasing. The Gyeongnam KDB Regional Innovation Venture Fund is likely not to limit its investment targets to firms based in Gyeongnam. It has been reported that 50% of the planned amount is intended to be invested in the 'Metropolitan League' targeting VCs operating in the metropolitan area.
A source from the VC industry noted, 'The Gyeongnam Master Fund aims to promote the inflow of large operators into the region, allowing investments of more than 30% of the target amount only to small and venture businesses in Gyeongnam.' They added, 'As the recent funding freeze continues, interest among VCs is also growing.'
Meanwhile, the first regional venture investment master fund, the Busan Future Growth Venture Fund, selected its GPs in October. The plan is to invest 90 billion won in 11 GPs, including both regional and metropolitan leagues, to form a subsidiary fund with a scale of 258.9 billion won, attracting 23 VCs during the application period in June.