S.Korea to form $6.2 bn corporate venture capital fund pool by 2025

The South Korean government and the private sector will jointly create a corporate venture capital (CVC) fund pool worth more than 8 trillion won ($6.2 billion) by 2025, the Ministry of Trade, Industry and Energy said on Monday.

CVC refers to a corporate’s direct investment in external innovative startups. The Korean government has allowed domestic holding firms to own CVC units since December 2021 to boost the VC ecosystem.

The ministry held an event to celebrate the launch of CVC Alliance, a group of 42 VC units under Korean corporates including steel giant POSCO Holdings Inc. and fashion-to-construction conglomerate Kolon Corporation.

The CVCs will form 7 trillion won worth of funds, and the government will create an additional fund of more than 1 trillion won.

Hyosung Ventures, a VC unit within Korean conglomerate Hyosung Group, and Lighthouse Combined Investment Co., a fund manager backed by Asia-based mid-sized corporates, said they will respectively finance 51 billion won and 70 billion won first.

The ministry pledged it will speed up CVC-led open innovations in research and development and support invested companies’ growth.

CVC Alliance will accelerate backing startups, verifying the companies’ technologies and expanding their business capabilities, and building global networks. The group said the government should improve regulations to boost local CVCs’ attraction of funds and their investments abroad.

“CVCs are important today as key actors to accelerate open innovations between large corporates and ventures, and between major and new growth sectors,” said Minister Lee Chang-yang.

The ministry will soon ease regulations for CVCs, as well as increase the private sector investors’ participation in planning and assessing the ministry’s R&D projects.

Write to Han-Shin Park at phs@hankyung.com

Jihyun Kim edited this article.