This article was published on July 3, 2025, at 4:12 p.m. on ChosunBiz MoneyMove site.
As the process for selecting the asset management company (GP) for the joint 'Startup Korea Fund' established by the government and the private sector has officially begun, there are concerns about 'self-selection' becoming a reality as numerous private investor (LP) affiliated venture capital (VC) firms passed this year as well.
According to the venture investment industry on the 3rd, a total of 29 groups passed the first screening of the funding business for the Startup Korea Fund in 2025. All 12 private LP affiliated groups made it onto the list.
In the ultra-gap and institutional sector, five firms, including ▲Blue Corner Capital (ST International) ▲IBK Venture Investment (IBK Industrial Bank) ▲GNTec Venture Investment (KOOKSOONDANG BREWERY) ▲KingGo Investment Partners (KyungDong Pharm) ▲Hanil VC (Hanil Holdings, Hanil Cement), passed.
In the open innovation sector, seven firms, including ▲LX Ventures (LX Semicon) ▲HG Initiative (Hyundai Marine & Fire Insurance) ▲Exploration Investment (GS Engineering and Construction) ▲NH Venture Investment (NH Life Insurance, Non-Life Insurance, Bank, Capital, Securities) ▲Korea Innovative Pharmaceutical Consortium (Korea Pharmaceutical and Bio-Pharma Manufacturers Association (KPBMA)) ▲UTC Investment (Daesang Group) ▲POSCO Technology Investment (POSCO Holdings), also passed.
Last year, asset management companies affiliated with private LPs also passed in large numbers, igniting controversy over self-selection. At that time, more than half of the 20 firms ultimately selected as asset managers in the funding business were private LP affiliated asset managers. Only Hanwha Investment & Securities and DooWon Heavy Industries, which were set to establish Centix Ventures, did not make the list.
This year, about 30 private LPs participated in the Startup Korea Fund. The issue is that private LPs directly participate in the asset management company screening process. Last year, the Ministry of SMEs and Startups amended the 'Korea Venture Investment and Venture Investment Fund Management Regulations', allowing private LPs to participate in the funding review council when they jointly contribute with the fund of funds. This means that if a VC from a private LP applies, there is a higher likelihood of being selected as a GP.
The industry is criticizing that self-selection is being repeated this year as well. An industry insider noted, "In this Startup Korea Fund, added points are given if private LPs secure investment commitment letters," and explained, "Because private LPs directly participate even in the second screening, it creates a structure where asset managers affiliated with that group have a high chance of passing."
The Startup Korea Fund is a fund established by sharing the contribution amount between the government and the private sector. The plan is to select a total of 20 groups as GPs to form a minimum of 827.9 billion won in fund capital. According to officials, it is expected that private LPs will contribute 40% and the fund of funds 30%, filling 70% of the target amount. If it is assumed that a fund of 10 billion won is established, private LPs would contribute 4 billion won and secure 3 billion won from the fund of funds.
The fund of funds is expected to conduct on-site due diligence on the groups that passed the first screening. Subsequently, a second review including presentations of proposals by the asset managers will be undertaken, with the plan to finalize the asset managers by the third quarter.