In a move to catalyze innovation and propel startups toward success, the Seoul Metropolitan Government has created a 5 trillion won (3.7 billion USD) ‘Seoul Vision 2030 Fund’. This initiative comes as the first step in a four-year plan, with an initial fund creation of 1 trillion won (747 million USD) set to kick-start this year’s efforts.
The city administration had previously established the ‘Seoul Future Innovation Growth Fund’ (’19~’22) with an impressive 3.6 trillion won (2.6 billion USD) fund, surpassing the original target of 1.2 trillion won (897 million USD) by a remarkable 300%. This fund supported 1,191 promising companies across diverse sectors such as biotechnology, cultural content, and re-challenge endeavors.
Looking forward, the city of Seoul aims to secure a total of 5 trillion won (3.7 billion USD) in funding over the course of four years (2023-2026). This substantial finance is strategically designed to bolster the startup ecosystem, particularly in industries like robotics, biomedicine, fintech, and artificial intelligence. The fund’s overarching goal is to nurture innovative startups, fostering their growth into the coveted status of unicorns.
Amidst challenges faced by Korea’s venture investment landscape, including the trifecta crisis of high interest rates, soaring prices, and unfavorable exchange rates, the startup sector has experienced a downturn. Notably, venture investment from January to May 2023 plummeted by a staggering 54%, declining from 3.7 trillion won (2.7 billion USD) to 1.7 trillion won (1.2 billion USD) compared to the same period in 2022. This economic strain is exacerbated by the reluctance of investors to engage in risk-taking activities, preferring safer investment options amidst market uncertainties.
The ‘Seoul Vision 2030 Fund’ has been structured to span six key areas to address distinct challenges faced by startups:
- Scale-up Fund (1.4 trillion won/1 billion USD): To support startups engaging in open innovation collaborations with larger corporations, aiming to fuel domestic companies’ global expansion.
- Digital Conversion Fund (1 trillion won/747 million USD): Dedicated to companies in the digital transformation field, including artificial intelligence, cloud computing, and the Internet of Things, to further establish Seoul as a leading digital city.
- StartupSupport Fund (1 trillion won/747 million USD): A lifeline for startups navigating economic crises or temporary management difficulties, promoting growth for ventures with promising technologies.
- Seoul Bio Fund (750 billion won/560 million USD): Focused on nurturing promising startups in the bio and medical sectors, especially those that have thrived during the COVID-19 era.
- Cultural Contents Fund (600 billion won/448 million USD): Aiming to enhance the brand image of Seoul’s cultural content, by actively investing in startups and resident companies within this creative field.
- First Step Companion Fund (250 billion won/189 million USD): Targeting promising companies participating in Seoul’s R&D support project, along with beauty/fashion startups and businesses that have recently entered or graduated from the city’s startup support facilities within three years of inception.
This year marks a significant milestone as the Seoul Metropolitan Government injects 70 billion won from its budget into the ‘Seoul Vision 2030 Fund’, initiating the creation of a 1.65 trillion won (1.23 billion USD) fund by linking government and private investment funds. The fund will provide comprehensive support to innovative companies at every stage of development, from inception to maturity.
Furthermore, the city plans to secure an additional 350 billion won (261 million USD) over the next four years, thereby reaching the ambitious 5 trillion won (3.7 billion USD) goal by aligning government-raised funds with private investment. The comprehensive strategy aims to invigorate the currently sluggish venture investment market by strategically bolstering investment in promising sectors, and fostering international expansion opportunities for startups.
To ensure the fund’s effectiveness, the Seoul Metropolitan Government will focus on strong investment linkages for companies that align with the city’s policy projects. Additional evaluation points will be awarded during face-to-face assessments when specific policy linkage plans and investment strategies are presented.
In a bid to encourage localized investment, supporting management companies will be required to propose a minimum percentage of investment in Seoul for each target company presented by the Seoul Metropolitan Government in each fund field. Rigorous evaluations will be conducted, taking into account factors such as investment and withdrawal strategies, the expertise of the management team, and distinctive features unique to each management company.
The detailed announcement of the ‘Seoul Vision 2030 Fund Investment Project’ will be available on the websites of the Seoul Metropolitan Government and the Seoul Economic Promotion Agency. Interested parties are urged to prepare and submit necessary documents within the designated application period.
Kim Tae-gyun, head of the Seoul Metropolitan Government’s Economic Policy Office, expressed confidence in the initiative’s potential, stating, “We plan to create the Seoul Vision 2030 Fund to revitalize the overall startup ecosystem, including promising innovative technologies and startups. Starting with a fund of 1.65 trillion won (1.23 billion USD) this year, we will create a fund worth 5 trillion won (3.7 billion USD) over the next four years to diversify investments so that the venture and startup industry can escape from the frozen investment market and develop global competitiveness.”
Also Read,
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- Seoul Metropolitan Government (SMG) announces 100-billion-won support package for promising startups
- Seoul Gears Up for Global Startup Grand Festival “Try Everything 2023”; Aims for $55 Million Investment Boost
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