Korea Launches ₩4.4 Trillion Fund of Funds for 2026

On January 23, 2026, Korea took a significant leap towards reshaping its venture capital landscape by launching the ₩4.4 trillion Fund of Funds, an initiative driven by the Ministry of SMEs and Startups (MSS), in collaboration with the Ministry of Culture, Sports and Tourism (MCST) and the Ministry of Oceans and Fisheries (MOF). This initiative not only marks a shift from planning to execution but also integrates elements of artificial intelligence (AI), deep tech, cultural intellectual property (IP), and regional innovation.

A Coordinated Effort in Public-Private Investment

The government’s strategy includes a formidable investment of KRW 2.1 trillion in public capital, with the ultimate goal of mobilizing approximately KRW 4.4 trillion for venture fund formation. This commitment highlights one of the largest public-private partnerships in Korea’s history, focusing on sectors critical to the nation’s competitive edge.

Within the MSS framework, investments will target 13 thematic areas, contributing to a total venture capital capacity of KRW 3.6 trillion. Central to this strategy is the KRW 550 billion “Next-Generation Unicorn Development Project,” which will support AI and deep tech ventures, nurturing early-stage companies into scalable businesses.

Targeted Funds for Emerging Industries

This comprehensive program includes a KRW 740 billion Startup and Scale-up Fund designed to provide over KRW 60 billion per company for promising unicorn candidates. Additionally, the KRW 250 billion Global Expansion Fund is tailored for startups seeking international growth, while the KRW 230 billion Regional Growth Fund aims to stimulate investment in non-capital regions, marking a pivotal move towards decentralized growth.

Complementing these initiatives, the MSS plans to create a KRW 200 billion Secondary Fund to enhance liquidity and support business succession through a KRW 100 billion M&A Fund.

Cultural and Maritime Investments: A New Focus

In a notable departure from traditional technology-centered funding, the MCST is set to invest KRW 499 billion, leading to the formation of KRW 731.8 billion in venture funds that focus on cultural technology and film. This includes increasing the Korean Film Main Investment Fund from KRW 39.6 billion to KRW 56.7 billion, reflecting a commitment to strengthen the nation’s film production and IP commercialization.

Meanwhile, the MOF is injecting KRW 15 billion into the launch of a KRW 21.5 billion “Marine Life Zone Fund,” aimed at promoting growth and job creation among regional maritime companies, further diversifying investment channels.

Regional and Global Integration

The 2026 Fund of Funds, also referred to as the Mother Fund, introduces a multi-tiered investment mechanism that efficiently connects parent and subordinate funds. This year, approximately four regions are expected to receive KRW 4 trillion in parent funds and KRW 7 trillion in sub-funds, with forecasts indicating that total sub-fund formation could exceed KRW 3.5 trillion by 2030.

On the global stage, the MSS will contribute KRW 130 billion to facilitate the establishment of over KRW 1 trillion in global funds. There are plans to create a Singapore-based global parent fund with a target of USD 200 million by 2027, aimed at attracting foreign venture capital into Korean startups.

A Shift in Policy and Funding Strategy

The ₩4.4 trillion Fund of Funds solidifies the framework outlined by MSS earlier in the year. Initially focused on KRW 1.6 trillion, this expanded strategy emphasizes AI, regional innovation, and sustainable growth through a multi-faceted governance model. Unlike previous cycles of funding that leaned heavily towards certain policy-driven sectors, this approach promotes a more balanced allocation across various strategic industries.

A notable feature of this initiative is the institutionalized requirement that mandates at least 20% of the capital be allocated outside the Seoul metropolitan area. This aims to empower regions beyond the capital and create a more equitable distribution of resources.

Additionally, funding specifically for second-time founders has significantly expanded from KRW 30 billion to KRW 120 billion, with overall allocations for early-stage ventures and youth entrepreneurship increased as well, signaling robust support for innovation and potential.

Cross-Sector Investment Strategy

According to MSS officials, this year’s program builds on the 20-year legacy of the Fund of Funds as a foundational pillar of Korea’s venture capital environment. They emphasize a “unified effort” to connect public policy capital with private investment efficiency, reflecting a commitment to enhance Korea’s global competitiveness.

The MCST aims to expand investment capabilities that bridge the gap from initial IP development to commercialization. Meanwhile, the MOF underscores the importance of linking regional maritime investments with high-quality job creation.

Implications for the Startup Ecosystem

The introduction of the 2026 Fund of Funds signifies a notable governance transition in deploying state-backed venture capital. By incorporating diverse sectors like culture and maritime industries alongside technology, Korea is signaling a whole-of-economy approach to venture capital.

For international investors, the planned Singapore-based parent fund illustrates Korea’s strategy to globalize its venture ecosystem, fostering partnerships with institutional investors across the region and further afield. This not only enhances Korea’s profile as a hub for venture capital but also encourages localized financial ecosystems that support startups in underserved regions.

In reinforcing its commitment to a balanced approach in venture funding, Korea is testing how effectively it can navigate industrial ambition while ensuring investment discipline, thereby setting a framework for sustained growth and innovation in the years to come.

Key Takeaways of the ₩4.4 Trillion Fund of Funds

• Program Overview: Launch of a ₩4.4 trillion Fund of Funds through joint efforts by MSS, MCST, and MOF.
• Core Sectors: Focused investment in AI, deep tech, cultural IP, and regional growth.
• AI & Deep Tech: ₩1.3 trillion allocated to the Next-Generation Unicorn Development Project.
• Cultural IP & Film: ₩731.8 billion targeted towards intellectual property and cultural technology investments.
• Maritime Innovation: Creation of a ₩21.5 billion Marine Life Zone Fund for regional maritime companies.
• Regional Growth: ₩230 billion allocated to expand local startup ecosystems.
• Liquidity & M&A: Establishment of funds aimed at liquidity and supporting business succession.
• Global Integration: Formation of a Singapore-based fund targeting foreign venture capital investments.
• Policy Mechanism: Institutional requirements for regional investment and a diversified fund structure.
• Strategic Impact: Positioning Korea as a globally connected venture capital hub with a balanced growth trajectory.