Minister Han Sung-sook of the Ministry of SMEs and Startups delivers congratulatory remarks at the “2025 Venture Billion Club Commemoration Ceremony,” held on November 27 at L Tower in Seocho District, Seoul. (Photo provided by the Ministry of SMEs and Startups.)
SEOUL, Nov. 30 (Korea Bizwire) — South Korea’s venture capital market is showing signs of revival after a prolonged slump, with third-quarter investment surpassing 4 trillion won for the first time since the pandemic era. The rebound has raised hopes that the country’s startup ecosystem may finally be emerging from its downturn.
According to quarterly data released by the Ministry of SMEs and Startups on Nov. 13, venture investment totaled 4.04 trillion won in the July–September period, up 27.8 percent from a year earlier. After peaking at 5.07 trillion won in late 2021, quarterly investment has fluctuated between the high 1 trillion and high 3 trillion won range.
The shift comes amid a government push to mobilize 40 trillion won for venture financing under the Yoon administration. Since taking office, SME Minister Han Sung-sook has emphasized positioning Korea as one of the world’s leading venture powerhouses, a message that appears to be resonating with both public and private capital.
Notably, private-sector participation has strengthened. In the first nine months of the year, private investors accounted for 83.4 percent of all venture fund formation — a 7.5-percentage-point increase from last year. Financial institutions contributed 2.58 trillion won, followed by general corporations, venture capital firms, pension funds and individuals.
“Venture investment is clearly picking up across both policy finance and private channels,” said Yoo Dong-gi, vice president of Enlight Ventures. “Paradigm shifts in artificial intelligence and semiconductors are driving new opportunities. With traditional industries stagnating and large corporations moving more slowly, venture capital is filling the gap.”
Analysts expect government-led funds deployed this year to begin producing meaningful spillover effects in early 2026.
The venture investment market is showing signs of recovery. (Image courtesy of Yonhap)
Mother Fund Marks 20 Years as Catalyst
The rebound also reflects the growing role of Korea’s “Mother Fund,” a government-backed fund-of-funds established in 2005 that is marking its 20th anniversary this year. The fund has played a pivotal role in supporting early-stage companies and capital-intensive sectors such as AI and deep tech, often stepping in where private markets hesitate.
According to Korea Venture Investment Corp., which manages the Mother Fund, 41 of Korea’s 48 unicorns — or 85.4 percent — have received backing from Mother Fund–linked sub-funds.
Since its launch, the fund has created 1,376 sub-funds worth 46 trillion won and invested 35 trillion won into more than 11,000 startups and venture firms. Of the 315 sub-funds that have reached maturity, 9 trillion won in assets have been liquidated, returning 2.98 trillion won to the Mother Fund — an indication, officials say, that the program is generating sustainable returns rather than functioning solely as a subsidy. Completed funds have generated an average annual return of about 8 percent.
Companies that have benefited from Mother Fund investment include the K-beauty brand d’Alba Global, founded in 2016 and listed on the Kospi this year. Backed by 50.4 billion won in venture investment, including Mother Fund capital, the company recorded 300 billion won in revenue and 59.8 billion won in operating profit last year. Its market capitalization now stands at 1.665 trillion won.
Secondhand marketplace Daangn Market has received 247 billion won in venture financing, including Mother Fund contributions, and has grown into a 2.5 trillion won unicorn with 43 million users. AI chipmaker Rebellions, which has raised 650 billion won, has likewise become Korea’s first AI semiconductor unicorn with a valuation of 1.9 trillion won.
A venture-capital industry official said the Mother Fund was created after the dot-com crash to revive Korea’s collapsed early-stage investment market. “It has helped diversify the ecosystem by supporting high-risk, early-stage and next-generation industries, and by crowding in private capital,” the official said.
M. H. Lee (mhlee@koreabizwire.com)
