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In order to encourage the private sector’s investment in the face of diminishing venture capital, South Korea is expected to invest in startups over four years.
FREMONT, CA: The Seoul Vision 2030 Fund, established by the local government of Seoul in South Korea's capital city, will invest five trillion won (3.9 billion USD) in startups over the course of the following four years. This move is expected to encourage private sector investment amidst dwindling venture capital. Seoul will begin to pool money this year to create a five trillion won fund, which, if successful, would be the biggest fund ever organised by a regional government in Korea for SMEs and startups.
To create one of the world’s top five largest ecosystems, the new fund by the Seoul Metropolitan Government will invest in six sectors, comprehending scale-up funding worth 1.4 trillion won. The Seoul City Government is expected to invest 350 billion won in the Seoul Vision 2030 Fund using capital from its existing SME growth fund. It has already budgeted 40 billion won for it and intends to use funds from its fiscal stabilisation fund, which is made up of city income and deposits, as well as the general budget and returns from previous fund investments. The new fund will start operating in 2026 and expire in 2030.
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Startups embraced the decision since they have been struggling with dwindling venture capital funding amid concerns of an impending global recession brought on by harsh monetary tightening moves taken by central banks around the world to control inflation.
The amount of venture capital invested in Korea in 2022 dropped 11.9 per cent, or 916.2 billion won, from 2021, according to the Ministry of SMEs and Startups. Venture capital investment decreased by 1.8 trillion won year over year, particularly in the second half of last year when global monetary tightening escalated. A public bid for capital from this year's first fund more than doubled from last year as the central government and private sector continue to streamline.
Industry observers expect that if the Seoul city government’s new startup fund is successfully launched, it will invigorate the private sector to resume investment in startups.
Industry observers anticipate that if the new startup fund established by the Seoul city government is successfully launched, it will encourage the private sector to restart investing in startups.
The city government of Seoul has successfully raised more than two trillion won for a different fund of funds, which invested 645.1 billion won over four years until last year in 470 startups and SMEs that are engaged in the development of innovative digital technologies as well as other promising industries, like the content business. Growth funds and other investors later joined the city government's 175.1 billion won initial investment.
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