The Ministry of SMEs and Startups Expands Regional Venture Funds.

Sejong, South Korea - The Ministry of SMEs and Startups (MSS) and the Korea Venture Investment Corp (KVIC) announced a policy framework to expand venture capital infrastructure outside the capital region, citing return data from previously liquidated regional funds.

According to ministry data, the government's fund-of-funds has established 113 regional funds totaling KRW 1.80 trillion (US$1.31 billion) since 2006. 

Regional funds liquidated within the past five years recorded an average return rate of 11.6%. 

The highest-performing regional fund, which allocated initial capital to MPLUS Corp. and Peptron Inc., achieved a 15.2% yield and a return multiple of 3.4.

Based on this data, the MSS is introducing new allocation requirements. 

Sub-funds receiving capital from the state fund-of-funds in 2026 will be subject to a mandatory 20% regional investment quota. 

The ministry will also grant preferential selection to fund managers who commit to investing at least 30% of their capital in small and medium-sized enterprises (SMEs) located outside the capital area.

Under the revised guidelines, 83% of funds selected during the 2026 regular funding cycle applied for the regional investment preference, up from 29% in 2025. 

The proportion of selected general partners (GPs) headquartered outside the capital region rose to 13.3% in 2026, from 8.8% the previous year.

The MSS and local governments plan to establish a KRW 2.00 trillion (US$1.46 billion) Regional Growth Fund between 2026 and 2030. 

During the second half of 2026, KRW 450.00 billion (US$328.46 million) will be deployed across five designated areas: the Daegyeong region, the Southwest region, Jeonbuk, Daejeon, and Ulsan.

Four science and technology institutes—the Korea Advanced Institute of Science and Technology (KAIST), Daegu Gyeongbuk Institute of Science and Technology (DGIST), Gwangju Institute of Science and Technology (GIST), and Ulsan National Institute of Science and Technology (UNIST)—will participate as limited partners in the Regional Growth Fund. 

The ministry stated that the capital will be used to establish funds for startup cities centered around these institutes.

KVIC will establish regional investment centers in the Southwest (Gwangju), Central (Daejeon), and Daegyeong (Daegu) regions beginning in the second half of 2026. 

The existing Busan office will be expanded and reorganized into the Southeast Investment Center. 

These offices will manage the Regional Growth Fund and identify local institutional investors.