The Ministry of SMEs and Startups and Korea Venture Investment Corporation on the 13th launched the "LP Growth Fund" to channel private capital from pension funds, the financial sector, and industry into the venture investment market. The plan is to create a venture fund of about 1 trillion won by linking 340 billion won in private investment with 170 billion won from the Fund of Funds.
The Ministry of SMEs and Startups (MSS) and Korea Venture Investment Corporation held the "LP Growth Fund launch ceremony" and the "third-quarter Fund of Funds policy forum" that day at the Startup Venture Campus (SVC) in Mapo District, Seoul.
The LP Growth Fund is an investment platform designed to make it easy for a wide range of limited partners—such as pension funds, the financial sector, and industry—to participate in venture investment. The government plans to establish a two-track commitment structure, through either sub-funds or a master fund, and to offer incentives such as first-loss coverage and put options to encourage private limited partners to participate in venture investment.
The biggest feature of the LP Growth Fund is that the Fund of Funds serves as a platform to draw new limited partners and pension funds into venture investment.
Of the 18 institutions that decided to commit capital, five—the National Sports Promotion Fund, the Supply Chain Stabilization Fund, The Export-Import Bank of Korea, KMI Korea Medical Institute, and the Geukdong Logistics Group—will, with this LP Growth Fund, be investing in a venture investment partnership for the first time.
In addition, three pension funds—the National Sports Promotion Fund, the Industrial Accident Compensation Insurance and Prevention Fund, and the Supply Chain Stabilization Fund—have confirmed investments. Multiple additional pension funds are nearing final decisions, and once procedures are completed, pension fund investment is expected to expand to about 100 billion won, more than five times last year's level.
Another feature is expanding private capital participation while reducing the share of government fiscal commitments. When private limited partners invest 340 billion won, the Fund of Funds will add 170 billion won, for a total of 510 billion won, and on that basis the plan is to create a venture fund of about 1 trillion won. The aim is to move beyond simply injecting fiscal funds and instead actively draw in private capital to raise the multiplier effect of government finances.
Investment in strategic industries will also be expanded. Together with a consortium of the Export-Import Bank and BNK Financial Group, a 110 billion won defense-specialized fund will be created. In addition, through the participation of large, mid-sized, and small companies such as Naver, Hyosung, GS, Sunic System, Geukdong Logistics Group, and Taehwa Group, the plan is to form an open innovation fund of about 250 billion won in AI, beauty, bio, and defense.
At the third-quarter Fund of Funds policy forum held that day, discussions were held under the theme "Rediscovery of venture investment as a vehicle for managing private capital."
Participants emphasized that for private limited partners such as pension funds, mutual aid associations, and the financial sector to use venture investment as a pillar of long-term asset allocation, they need data that can show the long-term performance of venture investment, objective benchmarks, and a systematic evaluation and reporting system. They also agreed that the Fund of Funds should strengthen its role as a platform that connects private capital so that limited partners and managers can build long-term partnerships.
Noh Yong-seok, first vice minister at the Ministry of SMEs and Startups (MSS), said, "The government must go beyond the role of a primer supplier and prepare for the era of Fund of Funds 2.0, which channels accumulated national capital into risk capital," adding, "With the launch of the LP Growth Fund, we will gather voices from the field and strengthen the Fund of Funds' role as a 'next-generation venture investment platform.'"