The Ministry of SMEs and Startups announced on the 6th the venture investment systems that will newly change in 2026, based on revisions to the Act on the Promotion of Venture Investment and its subordinate statutes, including easing the investment obligation period for venture investment companies, raising the tax credit rate for private venture fund-of-funds, and expanding pension and public funds' participation in venture investment.
This round of legal and institutional reforms has been pursued in three directions as a follow-up legislative task to the comprehensive plan to leap to a top 4 venture power, which has been in effect since 2025 or will be revised in 2026: ▲ improving investment regulations for venture investment actors ▲ expanding tax support for venture investment ▲ strengthening the foundation of the venture investment ecosystem.
First, the period for fulfilling investment obligations by venture investment companies and others will be eased from the current three years to five years. In addition, to reduce the initial management burden, they will be required to make at least one investment within three years after registering as a venture investment company and at least one additional investment within five years. If a corporation invested in by a venture investment company is subsequently included in a business group subject to restrictions on mutual investment, the obligation to sell within five years will be abolished, and if a corporation invested in by a corporate venture capital (CVC) is subsequently included in the same group subject to mutual investment restrictions, a nine-month grace period will be granted for disposing of equity to improve conditions for recovering investment funds.
In the event of a business transfer or merger and acquisition (M&A) between venture investment companies, the succession period for the effects of administrative dispositions received by the previous company will be drastically adjusted from indefinite to two years, and exceptions to succession will be established to protect bona fide transferees. In addition, the scope of financial companies in which venture investment companies and others may exceptionally invest will be expanded to include unlisted stocks and fractional investment trading platforms to lay the foundation for the growth of innovative finance startups.
The investment obligation for individual funds (20%) managed by a general partner (GP) will be abolished, and only the investment obligation for the total fund (40%) will apply to enhance management autonomy. A basis will be established to allow foreign investors to contribute in U.S. dollars without separate currency exchange procedures, thereby promoting inflows of overseas funds. To invigorate private venture fund-of-funds, the minimum formation size will be lowered from 100 billion won to 50 billion won, and the initial investment amount will be lowered from 20 billion won to 10 billion won, respectively. In addition, the scope of mandatory investment targets for private venture fund-of-funds has been improved to include not only venture investment partnerships but also individual investment partnerships.
The investment obligation targets of individual investment partnerships whose GP is an accelerator will be expanded to include corporations in their fourth to fifth year with no record of attracting investment, easing the funding burden of promising corporations with technological strength, and the ceiling on the proportion of investments in listed companies by individual investment partnerships will be raised from 10% to 20%. Beyond early-stage startups directly selected and nurtured by accelerators, investments for management control will be allowed in preliminary entrepreneurs and others, expanding the scope for accelerators to establish subsidiaries, and the registration requirements for professional individual investors have been eased to improve individuals' access to venture investment participation.
Tax support will also be strengthened. The tax credit rate for corporate contributions to private venture fund-of-funds will be raised from 3% to 5% based on the increase in contributions, and the same tax benefits as direct investment will apply when a venture investment partnership invests through a special purpose company (SPC). In addition, the scope of statutory funds that can participate in venture investment will be expanded to all funds under the National Finance Act to support participation in venture investment by various fiscal actors, including pension and public funds. A basis has been established to extend the duration of the parent fund, which is stipulated until 2035, in 10-year increments.
Minister Han Seong-sook of the Ministry of SMEs and Startups (MSS) said, "This institutional reform is a comprehensive overhaul tailored to changes in market conditions so that venture investment can be carried out more flexibly and sustainably," and added, "To leap to a top 4 venture power, we will continue to communicate closely with the industry and do our best to ease investment regulations."