[비즈한국] Attention is focused on the 'Korean NVIDIA Sovereign Wealth and National Fund' concept proposed by Democratic Party of Korea leader Lee Jae-myung. The Democratic Party plans to create this fund by targeting various economic entities, including the government, pension funds, the general public, and corporations. In contrast, the People Power Party remains negative about the initiative, citing unclear accountability should the fund-raising phase fail.
Setting aside this political debate, critics point out that for a national fund to be created successfully, incentives to attract private capital are essential. This is because current policy funds run by the government are losing popularity, with the proportion of private-sector investment steadily declining.
In a YouTube video posted by the Democratic Institute's Collective Intelligence Center on the 2nd, Leader Lee proposed the 'Korean NVIDIA' model, stating, "If we foster companies like NVIDIA and the public holds about a 30% stake, we won't need to rely on taxes." He suggested that if an artificial intelligence (AI) company with a 30% stake held by the state and the people succeeds, the government could potentially reduce tax collection by an amount equivalent to the investment returns. Following this, the Democratic Party has been consistently promoting Lee's sovereign wealth and national fund concept, announcing plans to create a 50 trillion won national fund to foster advanced strategic industries.
However, People Power Party floor leader Kwon Seong-dong told reporters at an AI industry discussion on the 6th, "To receive funds from the public, the target company's probability of success must be extremely high, and if the fund fails, the issue of who takes responsibility is unclear," adding his opposition by saying, "Creating this fund will not be easy."
In reality, the inflow of private investment is essential for the success of such a national fund. The government currently implements various policy funds to promote capital supply in fields where private capital is hesitant to invest due to high risks. Yet, the appeal of these policy funds to the private sector is cooling down. Domestically, numerous policy funds created with capital contributed by 12 government ministries, the Korean Intellectual Property Office, and public institutions are in operation. According to the National Assembly and various ministries, the budget for policy funds has increased annually, growing from 1.0528 trillion won in 2023 to 1.6852 trillion won last year, and nearing 2 trillion won this year at 1.8444 trillion won.
Government budgets invested in this way become policy funds known as 'fund of funds' (funds that invest in other funds), which are then indirectly invested in various companies alongside private capital. The Ministry of SMEs and Startups manages the SME Fund of Funds; the Ministry of Agriculture, Food and Rural Affairs manages the Agriculture, Food and Rural Affairs Fund of Funds; the Financial Services Commission handles the Innovation Growth Fund, Regional Revitalization Investment Fund, Semiconductor Ecosystem Fund, and Nuclear Industry Growth Fund; the Ministry of Economy and Finance operates the Special Infrastructure Fund; the Ministry of Science and ICT covers the Content Strategy Fund and SME Fund of Funds; the Defense Acquisition Program Administration manages the K-Defense Export Growth Fund; and the Ministry of Culture, Sports and Tourism contributes to the Content Strategy Fund, Global League Fund, and SME Fund of Funds, respectively.
However, looking at the numerous SME funds of funds contributed to by ministries such as the Ministry of SMEs and Startups, the Ministry of Culture, Sports and Tourism, and the Ministry of Science and ICT, the ratio of contributions from the government and policy institutions is steadily increasing. According to Korea Venture Investment Corp., the average contribution ratio from government and policy institutions to the SME Fund of Funds was 40.5% in 2022, but it rose to 49.7% in 2023, and remained at 49.7% as of August 2024. In particular, among the SME funds of funds, the government and policy institution contribution ratio for the Angel Account (angel investment promotion fund) under the Ministry of SMEs and Startups was 81.7%, and 75.7% for the Regional Account (regional revitalization fund). The Ministry of Land, Infrastructure and Transport's Urban Regeneration Account (urban regeneration fund) had a government and policy institution contribution ratio of 81.6%, and the Ministry of Oceans and Fisheries' Marine Account (marine industry support fund) reached 71.6%.
The SME funds of funds, which help with investment in small businesses, are in a relatively better situation. For the Agriculture, Food and Rural Affairs Fund of Funds, the government and policy institution contribution ratio exceeds 60% on average every year. Notably, the Agroseed fund, which invests in early-stage agricultural and food startups, has a government and policy institution contribution ratio of 90%, and the Young Farmers fund, which supports young agricultural entrepreneurs, reaches 84.6%. Although the government has created 'priming water' for investment through various policy funds, there is still a lack of sufficient merit to attract enough contributions from private investors such as venture capital, financial institutions, corporations, individuals, and foreigners.