"The vessel to receive unicorns is too small"… VC Association Chair raises "30 trillion won KOSDAQ fund"

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"In the venture ecosystem, KOSDAQ is a critical juncture for a virtuous cycle. When market conditions are favorable, NASDAQ sees a significant increase in both the number and scale of listed companies, whereas KOSDAQ remains stagnant at around 100 listings per year. The venture ecosystem, which has been carefully cultivated over a long period, will not collapse only if KOSDAQ revives."

The venture investment market has expanded to an annual scale exceeding 10 trillion won, but according to Kim Hak-gyun, Chairman of the Korea Venture Capital Association (VC Association), the exit routes for recovering investments remain narrow. He emphasized that a virtuous cycle in the venture sector can only be completed if KOSDAQ grows into a market where companies can continue to expand even after listing.

Kim (Chairman) has served at LG Venture Investment (now LB Investment) and Hanwha Investment, and currently serves as the representative of Quantum Ventures Korea. In February 2025, he was elected as the 16th Chairman of the VC Association through the association's first-ever competitive election.

According to the Ministry of SMEs and Startups, new venture investments last year reached 13.6 trillion won, while venture fund formation totaled 14.3 trillion won. Venture investment in the first half of this year was 8.8676 trillion won, a record high for the first-half period. In contrast, according to Kim (Chairman), new KOSDAQ listings over the past five years have remained at around 80 to 100 per year, excluding SPACs (Special Purpose Acquisition Companies), with public offering amounts staying at levels of 2.4 trillion to 3 trillion won. Kim (Chairman) pointed out, "NASDAQ can accommodate far more companies when the market is good, but our vessel itself is small."

He stated that unicorn startups with corporate valuations exceeding 1 trillion won are preparing for listings, but the market is not ready to receive them. Kim (Chairman) said, "Foundations must be established so that companies like Rebellions and Furiosa AI can raise funds in the market even after listing and advance toward becoming global enterprises," adding, "If the stock prices of such large companies drop from their first day of listing, not only will subsequent fundraising be affected, but companies preparing for follow-on listings will inevitably be impacted as well."

He also cited changes in industrial structure as a reason. In the past, the fast-follower model, which involved investing in subsidiaries of large conglomerates, was dominant, allowing companies to be grown and listed within 8-year maturity funds. However, now that deep-tech companies must act as first movers (market leaders), growth takes considerably longer. The structure inevitably leads to an increase in companies listing before they have fully matured within the fund's maturity period.

The problem is the lack of investors willing to take on these companies after listing. Kim (Chairman) noted, "Institutional investors account for about 80% of NASDAQ, and post-listing investment amounts are larger than venture investments," stating, "Even for companies that listed before generating profits, someone must take the baton and help them grow, but that part is missing in our market."

Kim (Chairman) believes that secondary funds (funds that purchase existing fund shares or held stocks) should serve as a buffer in the immediate term. As the maturities of large-scale funds formed since the 2010s will begin to arrive en masse from 2028, he argued that recovery timing should be delayed through secondary funds to buy time, while simultaneously pursuing fundamental improvements to the recovery structure.

As a solution, he proposed a 30 trillion won "KOSDAQ Activation Fund" that would invest in new and old shares (stocks held by existing shareholders) of KOSDAQ-listed companies. He said, "The proportion of institutional investors on KOSDAQ is only in the 6th% range, and short-term trading centered on retail investors continues; this structure cannot nurture companies," adding, "Expanding the scale of the KOSDAQ market is a top priority, and it must be supported by tax incentives and regulatory relaxation."

To this end, he called for close collaboration among government ministries. Kim (Chairman) stated, "Rather than approaching unlisted and listed markets separately, relevant ministries such as the Ministry of SMEs and Startups and the Financial Services Commission should link organically and move together."

He expressed concern regarding the KOSDAQ Section 1 and Section 2 restructuring being pushed by financial authorities. He takes the position that if institutional investor funds concentrate in the Section 1 market, the Section 2 market, where new listings are concentrated, could be thoroughly marginalized. He stated, "Dividing the market will intensify hierarchy, potentially relegating Section 2 to a marginalized market," and revealed, "The prerequisite for such structural reform is improving the market's constitution through the KOSDAQ Activation Fund."

In addition to activating KOSDAQ, Kim (Chairman) disclosed that the association is promoting the formation of a "cross-border fund" as part of its global strategy. The concept is that if funds investing simultaneously in Korea and Taiwan are jointly managed by operators from both countries, it would solve issues ranging from attracting overseas LPs (Limited Partners) to overseas investment and overseas listings all at once. He said, "The association will take the lead in supporting efforts so that young people can dive into entrepreneurship without hesitation and expand into the world."

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