Venture Industry Warns: "Cutting Fund of Funds Risks Missing Golden Opportunity for Advanced Industry Growth"

Venture Industry Expresses "Regret" Over Fund of Funds Budget Cut Discussions
Korea Venture Business Association: "Budget Cuts Will Increase Uncertainty"
"Be Supporters for the Growth and Challenges of Venture Companies"

The venture industry has expressed strong regret over discussions in the National Assembly regarding potential cuts to the budget for the Fund of Funds.

On November 18, the Korea Venture Business Association issued a statement, saying, "At a time when public and private capabilities must be mobilized to respond to major technological transformations such as the AI and semiconductor supercycle, discussions in the National Assembly's budget review process about reducing the Fund of Funds budget are raising serious concerns for the venture industry."

As the National Assembly's Special Committee on Budget and Accounts prepares to review the budget adjustment subcommittee, opposition parties are leading calls for cuts to the Fund of Funds budget. Song Eonseok, floor leader of the People Power Party, recently mentioned the Fund of Funds project directly during a press briefing, stating, "This year's budget should focus on people's livelihoods, and populist budgets should be cut."

In September, the government announced plans to expand next year's budget for the SME Fund of Funds to 1.1 trillion won, the largest amount ever. Of this, 50% will be allocated to AI and deep tech sectors, with the goal of supporting Korea’s leap to become one of the world's top four global venture powerhouses.

The association emphasized, "Due to the high interest rate environment following COVID-19, the venture investment market has frozen, causing talented individuals considering startups to hesitate, leading to a decline in technology-based startups. If the Fund of Funds budget is cut at a time when the venture investment market is showing clear signs of recovery in the third quarter of this year, it will increase uncertainty and could result in missing the golden opportunity to foster venture companies that will lead advanced strategic industries."

The association also refuted claims that "the budget is not fully invested in a timely manner within the allocated year." It stated, "Such arguments do not align with global venture investment standards. Suggestions that the budget should be divided and allocated based on annual investment rates also pose significant risks, as budget uncertainty can lead to a sharp decline in private investment, fund formation failures, and market contraction."

The association argued, "Now is the time for the government and the National Assembly to refrain from reducing the Fund of Funds budget and instead strengthen sustainable and stable financial support, so that venture companies can continue to grow and take on challenges even amid economic uncertainty."

It continued, "The venture industry pledges to serve as a growth engine to help Korea overcome the complex crises it faces," urging, "We ask the government and the National Assembly to become strong supporters."

This content was produced with the assistance of AI translation services.