This article was displayed on the ChosunBiz MoneyMove (MM) site at 4:45 p.m. on Mar. 30, 2026.
The government will increase the budget for the Korea Venture Investment Corp. fund-of-funds contributions, which had been set at 820 billion won this year, to a level approaching 1 trillion won. The Ministry of SMEs and Startups included a plan to increase contributions to the fund-of-funds in the supplementary budget proposal. Expectations for revitalizing venture investment and concerns about market distortion due to a concentration of policy funds are emerging at the same time.
According to the venture capital (VC) industry on the 30th, the Ministry of SMEs and Startups (MSS) recently included a 170 billion won increase in the contribution budget for the Korea Venture Investment Corp. fund-of-funds in the supplementary budget proposal. If the supplementary plan is added to this year's main budget of 820 billion won, the total will rise to 990 billion won. This far exceeds last year's MSS contribution budget (including the supplementary budget, 800 billion won).
The push to increase the fund-of-funds comes just about three months after 280 billion won was cut during the National Assembly's budget review late last year. At the time, the Ministry of SMEs and Startups (MSS) had planned to contribute 1.1 trillion won, but reduced the budget after the National Assembly and the industry pointed out that securing private matching funds would be difficult and the market could be distorted.
Behind the MSS move to increase the budget is the government's strong will to revitalize venture investment. The Lee Jae-myung administration set "nurturing a 40 trillion won venture investment market" as a state task and presented a goal of creating 50 unicorns (corporations valued at 1 trillion won or more) and decacorns (corporations valued at 10 trillion won or more).
The fund-of-funds, a "fund of funds" that supplies capital to venture funds, was created in 2005. The core is "private leverage," in which the government injects capital as a "primer" and then induces private capital inflows, and reliance is so high that more than half of domestic VCs are assessed as unable to form funds without the fund-of-funds.
The Ministry of SMEs and Startups (MSS) expects the 170 billion won increase to lead to the creation of about 680 billion won in new venture funds. The judgment is that government investment, when combined with private capital, typically generates a "leverage effect" of more than four times. The plan is to then focus support on investments in deep tech fields such as artificial intelligence (AI).
Views in the market are divided. With the Public Growth Fund, led by the Financial Services Commission, already planning to contribute 1.5 trillion won to indirect investments this year, if the fund-of-funds also joins in, competition to secure private matching funds will intensify and there could be side effects from excess liquidity.
A head of a mid-sized VC said, "Even now, there are frequent cases of giving up fund formation because private matching funds cannot be secured," and noted, "If only government money swells, the money that cannot find investment targets could end up concentrating on a few promising corporations, causing side effects that only inflate valuations."
Meanwhile, the supplementary budget proposal containing the plan to increase the fund-of-funds is set to be sent to the National Assembly after approval by the Cabinet meeting. It is expected to undergo standing committee reviews and a comprehensive policy inquiry next month before final handling at a plenary session.