The long-standing challenge in the venture industry of 'fund venture investment' has taken its first step. The Korea Venture Investment Corporation and the Trade Insurance Fund are jointly investing 40 billion won to establish a venture fund.
The Ministry of SMEs and Startups announced on the 27th that the Korea Venture Investment Corporation and the Pension Fund Investment Pool (Trade Insurance Fund) will jointly invest 40 billion won through the 'LP First Step Fund Investment Announcement.'
'LP First Step Fund' is a new fund established this year to encourage institutional investors such as pension funds and financial institutions, which have no experience in investing in venture investment associations, to participate in venture investments.
The government first bears the losses to reduce investment risks, and if the revenue exceeds expectations, it recoups part of the amount. It provides enhanced benefits to investors, including the right to purchase equity at a predetermined price if the corporations grow. Another characteristic is that the initial investor can freely choose the sector they desire.
For this fund, the Trade Insurance Fund, which manages funds through surplus assets via the 'Pension Fund Investment Pool,' has made its first investment in a venture fund. This is the first time the Trade Insurance Fund has engaged in venture investment since the introduction of the Pension Fund Investment Pool system in 2001.
The Trade Insurance Fund and the Korea Venture Investment Corporation each contributed 20 billion won, initially securing a fund of 40 billion won. Based on this, they plan to select institutions to manage individual investment funds (self-funds) worth about 57 billion won. This self-fund is expected to contribute to the activation of the recovery market by investing in the 'secondary' sector, as desired by the Trade Insurance Fund.
Minister Han Seong-suk said, 'Venture funds are a key instrument of 'productive finance' that supports growth by investing in innovative ventures and startups and distributing the gains of growth as revenue to the investors.'
She continued, 'Although the Korea Venture Investment Corporation primarily invested in areas with high public interest, it has achieved a stable profit of over 8% per year on average and more than 10% in the last five years,' and added, 'This proves that pension funds and other surplus funds are a useful tool for generating stable revenue.'
She added, 'Through this 'LP First Step Fund,' the Pension Fund Investment Pool has opened the door to transforming into productive finance,' and emphasized, 'The Korea Venture Investment Corporation will strengthen its role as a 'venture investment platform' to ensure that a substantial amount of public and private surplus funds flow into the venture investment market.'