[Edaily Marketin Soyoung Park Reporter] As the government steps up its efforts to revitalize regional economies, initiatives to cultivate venture ecosystems—led primarily by local governments—are gaining momentum. Given that the industrial bases vary by region, each area is focusing on fostering its own specialized industries. In line with this trend, the nature of the capital required is also changing.

Venture capital (VC) firms in the Seoul metropolitan area have also moved quickly to establish separate teams dedicated to regional investments. In addition, they are partnering with local governments to set up funds that provide capital for regional strategic industries. The industry is closely watching to see whether these region-specific ecosystems will translate into actual investment returns.

According to the domestic investment banking (IB) industry on the 9th, domestic venture capital (VC) firms are increasingly moving into regional markets by integrating investment with the startup ecosystem. This goes beyond simply relocating offices to regional areas, as was done in the past. There is a growing trend of collaboration centered on existing local industries, large corporations, and research institutions.

The number of VCs establishing separate teams or legal entities focused on regional venture ecosystems has also increased. For example, MY Social Company (MYSC) is promoting a regionally specialized accelerator (AC) model. At the same time, it is discussing plans to launch region-based startups using the venture studio system.

Vision Equity Partners merged with KBridge Ventures in 2024, a firm specializing in investments in startups in the Busan and Yeongnam regions. Subsequently, the firm relocated its headquarters to Busan last year.

Impact Square has a separate division dedicated to local projects. This team not only runs accelerator programs for local entrepreneurs but also operates a growth hub and co-working space based in Yeongju, North Gyeongsang Province.

Industry insiders unanimously agreed that this trend was “made possible by the development of venture ecosystems specialized for each region.” For example, the city of Busan, which has consistently built its own independent ecosystem, was designated as a Blockchain Regulatory Free Zone in 2019. More recently, Busan has been making concerted efforts to attract global venture capital firms in order to secure its position as a springboard for global expansion.

In addition, Naju City is focusing on fostering the energy industry, led by Korea Electric Power Corporation (KEPCO). KEPCO recently launched KEPCO Technology Holdings. The plan is to identify and nurture energy and climate tech companies based on KEPCO’s energy technologies, patents, and demonstration infrastructure.

Daejeon, home to KAIST, is working to foster sectors such as △aerospace △defense △quantum △and biotechnology. Recently, Daejeon City drafted and submitted its second supplementary budget proposal to the city council. The proposal centers on strengthening investments in strategic industries to secure future growth engines.

There are also a growing number of cases where co-GP funds are being established, allowing regional and Seoul metropolitan area venture capital firms to jointly identify and invest in local companies. The Sopung Ventures–Hallym University Technology Holding consortium was selected as the general partner (GP) for the regional league of the second-year sub-fund of the “Gangwon Strategic Industry Venture Fund,” led by the Gangwon Special Self-Governing Province.

Another example is the “Gyeongnam Regional Innovation Next Unicorn Investment Fund,” jointly managed by BTB Ventures and Pacific Capital. This fund was recently selected as the GP for Gyeongsangnam-do’s “Gyeongnam-KDB Regional Innovation Venture Fund.” BTB Ventures is headquartered in Changwon, while Pacific Capital is headquartered in Seoul.

A representative from a domestic VC firm described the current trend, stating, “Since regional LPs often lack experience in expanding ecosystems or global networks, they are actively seeking to partner with GPs in the Seoul metropolitan area to solidify their foundations.” The representative added, “We, too, are currently discussing a program to expand into Japan with a specific region.”