Pension Funds and Financial Sector Commit 340 Billion Won... 1 Trillion Won 'LP Growth Fund' Launched

Government Share Reduced to 20%,
Multiplier Effect Expected to Exceed Fivefold

The government will establish the 'LP Growth Fund' worth approximately 1 trillion won to induce venture investment from pension funds, the financial sector, and industry. The plan is to expand the role of the fund-of-funds (Moat Fund) from its traditional role as a fiscal priming resource to an investment platform that attracts a wide range of private capital into the venture market.

No Yongseok, Acting Minister and 1st Vice Minister of the Ministry of SMEs and Startups, is delivering a greeting at the launch ceremony of the LP Growth Fund held on the 13th at SVC Seoul in Mapo-gu, Seoul. Ministry of SMEs and Startups

On August 13, the Ministry of SMEs and Startups and Korea Venture Investment Corp. announced that they hosted the 'LP Growth Fund Launch Ceremony' and the 'Q3 Moat Fund Policy Forum' at SVC Seoul, located in Mapo-gu, Seoul.

The LP Growth Fund is an investment platform designed with customized structures for each institution, enabling a diverse array of funding sources such as pension funds, the financial sector, and industry to participate in venture investment. The core of the fund is the government's two-track funding structure—either through sub-funds or parent funds—as well as incentives such as first-loss guarantees and put options to spur private capital into venture investment.

This fund will see participation from 18 private investing institutions. Among these, the National Sports Promotion Fund, the Supply Chain Stabilization Fund, the Export-Import Bank of Korea, KMI Korea Medical Institute, and KD Logistics Group are five institutions making their first venture capital commitment through the LP Growth Fund.

Three pension funds—the National Sports Promotion Fund, the Industrial Accident Compensation Insurance and Prevention Fund, and the Supply Chain Stabilization Fund—have also confirmed their participation. Additional pension funds are in the final stages of internal decision-making for further commitment. Once confirmed, the total amount committed by pension funds is expected to increase more than fivefold compared to last year.

The government plans for private investing institutions to contribute 340 billion won, with the Moat Fund linking an additional 170 billion won. This brings the total to 510 billion won in combined public and private commitments. Based on this, approximately 1 trillion won in venture funds will be established.

Notably, while public funding has traditionally accounted for around 60% of investment in the existing Moat Fund structure, the LP Growth Fund will reduce the public portion to 20% and raise the private capital portion to 80%. Through this, the multiplier effect of government funding is expected to increase by more than five times.

Specialized funds focusing on strategic industries such as defense, beauty, and bio will also be created. The Export-Import Bank of Korea and a consortium led by BNK Financial Group are planning to form an 110 billion won defense-specialized fund. Large, mid-sized, and small enterprises—including Naver, Hyosung, GS, Sunic System, KD Logistics Group, and Taehwa Group—are also participating, aiming to create an open innovation fund worth around 250 billion won, concentrated in AI, beauty, bio, and defense sectors.

Noh Yongseok, First Vice Minister and Acting Minister of the Ministry of SMEs and Startups, is taking a commemorative photo with attendees at the launch ceremony of the LP Growth Fund held on the 13th at SVC Seoul in Mapo-gu, Seoul. Ministry of SMEs and Startups

Following the launch ceremony, the 'Q3 Moat Fund Policy Forum' was held, where discussions focused on exploring ways to expand venture investment by private capital under the theme “Re-discovering Venture Investment as a Private Capital Management Tool.”

Attendees proposed that, for pension funds, mutual aid associations, and the financial sector to use venture investment effectively as a long-term asset allocation tool, three elements are essential: long-term series data on venture investment performance, provision of comparable performance indicators, and a system of evaluation and reporting that supports internal decision-making by private investors.

Noh Yongseok, First Vice Minister and Acting Minister of the Ministry of SMEs and Startups, said, “The government must move beyond its role as a mere supplier of priming capital and prepare for the Moat Fund 2.0 era, where accumulated national capital flows into venture capital. In line with the launch of the LP Growth Fund, we will also strengthen the role of the Moat Fund as the ‘next-generation venture investment platform’ by incorporating feedback from the field raised during the forum.”

The Ministry of SMEs and Startups will officially announce the first round of fundraising for the LP Growth Fund on August 14 and plans to select the fund manager within the fourth quarter, thereby commencing the full-fledged fund formation process.

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