TLDR: South Korea is implementing significant reforms to its venture investment landscape, allowing pension funds to invest in venture-backed companies and expanding the Mother Fund. These measures, announced on August 22, 2025, aim to channel substantial capital into AI and deep tech ventures, fostering long-term global competitiveness and supporting the government’s goal of becoming a top-three global AI power.
SEOUL, South Korea – In a strategic move to solidify its position as a global leader in artificial intelligence, South Korea has unveiled comprehensive reforms to its venture investment ecosystem. Announced on August 22, 2025, these reforms are designed to inject crucial capital into the nation’s burgeoning AI and deep tech startup sectors, with the ultimate goal of becoming one of the top three global AI powerhouses.
At the heart of this initiative is a sweeping reform that opens pension funds to venture investment, a significant shift aimed at broadening the pool of available capital for innovative startups. This move is complemented by the expansion of the Mother Fund, a central government vehicle that invests in venture sub-funds. The Mother Fund’s scheduled expiration in 2035 will be extended, ensuring a stable, long-term supply of capital for the venture market. Furthermore, its budget allocations will be strategically re-prioritized, increasing the share dedicated to AI and deep tech funding from 20% to 30%.
The Ministry of SMEs and Startups (MSS) is spearheading these efforts, with Minister Han Seong-sook reiterating the government’s commitment to achieving ₩40 trillion (approximately USD 30 billion) in annual venture investment by 2030 and fostering the creation of 50 unicorn companies. Minister Han emphasized the critical need for large-scale investment to drive Korea’s economic future, stating, “To achieve an AI-driven economic transformation and ultra-innovation, we must secure large-scale investment for ventures and startups that will drive Korea’s economic future. The ministry’s top priority will be restoring the weakened venture investment ecosystem, expanding annual venture investment to KRW 40 trillion (about USD 30 billion) by 2030.”
Beyond direct funding, the reforms also include measures to activate the exit market by expanding secondary funds. New rules will allow secondary share purchases to count as primary investment up to 20% of fund commitments. These provisions are intended to mitigate risk, enhance liquidity, and encourage greater participation from the private sector in the venture capital landscape.
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This strategic overhaul is part of a broader national agenda to accelerate AI adoption across various sectors, including manufacturing, laying a robust foundation for AI deep tech growth, startup scaling, and sustained global competitiveness. The government’s proactive stance underscores its determination to cultivate a vibrant and resilient startup ecosystem capable of driving future economic growth and technological innovation.
