Seoul Metropolitan Government has announced plans to create a KRW 325 billion (US$290 million) fund to support mid-stage startups as private sector investment in South Korean startups has dropped significantly.
According to the Ministry of SMEs and Startups, private sector investment in startups dropped 30.2% from KRW 1,063.6 billion (US$960 million) to KRW 742.9 billion (US$670 million) in the first half of 2020.
The government noted that mid-stage startups needed help to attract investment.
The Seoul Metropolitan Government will invest KRW 10 billion in the fund, which will be launched in December. Startups at the Series B stage who have been in business for 3 to 7 years will receive annual benefits.
The total funds will be divided into KRW 200 billion and KRW 125 billion, respectively.
The Seoul Metropolitan Government will appoint professional operators KB Investment and KTB Investment to manage the implementation of the fund.
This announcement is part of the government's critical initiatives for startup incubation, which include 1) labor cost support for technical professionals, 2) a startup promotion package, and 3) the creation of large-scale scale-up funds.
The new fund addresses the third key initiative.
The local government estimates that, on average, a startup will secure about KRW 3 billion in investment through this program.
Before implementing these changes, 61.2% of the total fund was invested in Series A stage startups.
This new initiative aims to balance support for mid-stage startups and strengthen the South Korean startup ecosystem in the face of declining private sector investment.