The Financial Services Commission of South Korea is launching a long-term technology investment fund worth 8.8 trillion won (approximately $7 billion) to support advanced technology sectors requiring extended investment, such as next-generation semiconductors, advanced pharmaceuticals, and aerospace.
The fund will have a lifespan of 15 years, longer than existing policy funds, and will increase the proportion of public funds to 77%, reducing the fundraising burden on private management firms.
On July 20, the Financial Services Commission held a public hearing at the Korea Development Bank's IR Center in Yeouido, Seoul, where it unveiled the operational plan for the long-term technology investment fund.
The fund will be established as an indirect investment fund for institutional investors within the National Growth Fund, specifically designed to support advanced technology sectors that require long-term patient capital. The commission plans to finalize the operational plan based on feedback from the public hearing and announce the selection of management firms for the 8.8 trillion won fund in the third quarter.
The fund will be composed of 6 trillion won from the Advanced Strategic Industry Fund, 800 billion won from the government, and over 2 trillion won from private capital. Approximately 77% of the total funding will come from public sources, significantly lowering the private investment burden compared to typical policy funds.
The fund's lifespan is set at a maximum of 15 years, exceeding the 8 to 10 years typical for standard policy funds, and allows for an actual investment period of up to 7 years, enabling long-term investments in technology companies.
Key investment targets will include leading technology firms in advanced strategic industries such as next-generation semiconductors and advanced biopharmaceuticals. The fund also plans to expand its investment focus to future core technology sectors, including aerospace. The commission will prioritize management firms that can evaluate not only financial performance but also technological capabilities, and will support the development of specialized management firms (KSTP) focused on future foundational and core technologies.
During the public hearing, Financial Services Commission Chairman Lee Ok-won stated, "In the context of intensifying global investment competition, securing foundational technologies that can change the future and internalizing core technologies in key industries are essential tasks. The National Growth Fund must also actively invest in technologies that require long timeframes."
He added, "We will consider rewarding management firms that grow alongside companies through additional investments, while imposing penalties for early withdrawals that do not align with the fund's purpose. The technological expertise of key management personnel is also crucial, so we will take into account whether firms have excellent management talent and whether they have implemented substantial and adequate compensation systems during the selection process."
Industry experts attending the hearing emphasized the need for long-term venture capital, noting that commercialization and investment recovery in areas like quantum computing, aerospace, and advanced biotechnology typically take at least 10 years. They agreed on the necessity of the long-term technology investment fund, pointing out that technology companies often face funding shortages when follow-up investments cease at critical performance milestones.
The Financial Services Commission plans to finalize the detailed operational plan based on the feedback received during the public hearing, select management firms, and proceed with the private capital fundraising process. Investment execution is expected to begin as early as the end of the year.
* This article has been translated by AI.
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