Korea is accelerating efforts to decentralize startup investment beyond Seoul. With the launch of the ₩101.1B ($74M) Busan Innovation Scale-Up Fund, the Ministry of SMEs and Startups is signaling a commitment to expand venture capital nationwide. The fund will target ₩200B ($147M) in sub-funds, creating a stronger foundation for regional startups in strategic industries.

Busan Positions Itself as Korea’s Next Regional Investment Hub

South Korea is strengthening its venture capital decentralization strategy with the launch of the Busan Innovation Scale-Up Venture Fund, a ₩101.1 billion ($74 million) regional mother fund that will channel capital into the nation’s second-largest city.

The program, officially unveiled on August 28 at the Busan City Hotel, is designed to grow ₩200 billion ($147 million) in sub-funds dedicated to startups and scale-ups rooted in Busan.

The Ministry of SMEs and Startups (MSS), in partnership with Busan Metropolitan City, BNK Busan Bank, and IBK Industrial Bank of Korea, will jointly manage the fund. The Korea Fund of Funds provided ₩60 billion ($44 million) as anchor capital, with additional commitments from municipal and financial backers.

The fund’s operating committee will finalize sector priorities in September, with sub-fund commitments scheduled to begin in October.

Busan Innovation Scale-Up Fund: Structure and Strategic Priorities

As a regional mother fund,the Busan Innovation Scale-Up Fund pools capital from both government and private participants to stimulate local venture ecosystems. Its scale includes:

• ₩101.1 billion ($74 million) in total mother fund commitments,
• Target of ₩200 billion ($147 million) in sub-funds dedicated to Busan-based ventures,
• Participation from four core institutions: MSS, Busan City, BNK Busan Bank, and IBK Industrial Bank of Korea.

Investment will focus on:

• Scale-up support for Busan-based SMEs and startups,
• Smart advanced manufacturing and innovation-driven SMEs,
• Nine designated strategic industries that underpin Busan’s economic identity,
• Entrepreneurial small businesses and emerging technology-driven firms (LICORN).

According to Busan City officials, at least ₩70 billion ($51 million) will be reserved for companies headquartered in Busan, ensuring that local ventures directly benefit from the program.

Part of a Wider Regional VC Strategy

The Busan launch is part of a ₩400 billion ($294 million) national initiative to build regional mother funds across Korea, including Gangwon, Gyeongbuk, and Chungnam.

Busan’s vehicle is the second fund to be established in 2025, following the Chungnam Corporate Growth Venture Fund earlier this month, which also debuted at ₩101.1 billion ($74 million). Together, these regional funds reflect MSS’s broader strategy to extend startup investment beyond Seoul, ensuring capital access across provinces.

By leveraging local governments, financial institutions, and the Korea Fund of Funds, MSS aims to ensure that venture capital becomes a nationwide growth engine.

Policy Voices: Busan as a Startup City

Vice Minister of MSS Noh Yong-seok emphasized that the Busan fund reflects Korea’s determination to cultivate robust startup hubs outside the Seoul metropolitan area:

“Busan is Korea’s second-largest city and a global hub for marine, logistics, and cultural industries. Thanks to joint efforts between the government and Busan, the city is now emerging as a major startup hub in Asia. MSS will ensure that robust venture opportunities extend beyond Seoul to empower regional startups.”

Deputy Mayor of Busan for Future Innovation Sung Hee-yeop added that establishing consecutive ₩100 billion-class mother funds signals Busan’s ambition to become a southern growth engine for corporate investment and innovation,

“Securing a second consecutive ₩100 billion mother fund is a meaningful achievement that expands the scale of regional investment. We will continue to establish mother funds so Busan can position itself as a new growth engine for the southern region’s corporate investment ecosystem.”

Shaping Korea’s Venture Ecosystem

The Busan Innovation Scale-Up Fund highlights several key trends shaping Korea’s venture ecosystem in 2025:

• Regional decentralization of capital: Investment flows are no longer concentrated in Seoul but extended to regional hubs with sector strengths.
• Public-private collaboration: The partnership model blends government anchor funding with private banks and corporate backers, creating sustainable regional VC pipelines.
• Strategic sector bets: Busan’s fund is poised to back smart manufacturing, logistics-linked industries, and emerging tech startups with high growth potential.
• Replication potential: With Gangwon and Gyeongbuk funds in the pipeline, Korea is testing a scalable model of localized venture capital deployment.

Busan Innovation Scale-Up Fund: Expanding Beyond Seoul, Toward Global Scale

Ultimately, the Busan Innovation Scale-Up Fund represents Korea’s bid to globalize its startup ecosystem by embedding venture capital strength across multiple provinces.

By building both funding and local infrastructure, the strategy ensures that Busan can evolve into a key node of Asia’s startup map, complementing Seoul while carving its own identity.

With ₩200 billion ($147 million) in sub-funds expected, the initiative positions Busan not just as a beneficiary of policy but as a future hub for scale-ups in biotech, smart manufacturing, and technology-intensive sectors — a signal to investors that Korea’s innovation economy is diversifying and expanding its geographic footprint.

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