IBK Venture Investment, an investment arm of the state-owned Industrial Bank of Korea, pledged to inject 500 billion won ($370 million) into local startups over the next three years at an event in Seoul on Thursday.

The investment unit, the ninth subsidiary under the IBK Financial Group, was founded in December with an initial capital of 100 billion won to fund early-stage startups. It was licensed as a new technology venture capital business in March, according to the lender.

While IBK Venture Investment will take on the role of an angel investor, meaning it will fund the early stages of development, its affiliate IBK Capital will execute secondary investments from Series A to pre-initial public offerings. Meanwhile, the policy lender IBK will handle principal investments and corporate financing for the funded companies.

"With the end of the COVID-19 pandemic, venture investments slowed down due to high borrowing rates. Seeing the increased need for investments in early-stage startups, we founded IBK Venture Investment to execute policy-level investments for the venture ecosystem," IBK Chairman Kim Sung-tae said in his opening speech at a ceremony commemorating the launch.

Kim had pledged to set up a venture capital firm to expand the state lender’s funding for local startups when he took office in January 2023.

“Based on our expertise, we will work in line with the government’s directive for technology growth, increasing the policy efficiency. We will put in all the resources of the group to support the growth of startups according to their life cycle,” he said.

IBK Venture Investment will inject 500 billion won into local startups with outstanding technology over the next three years, helping early-stage startups escape the “valley of death,” referring to a period during which firms face a funding gap.

“Startups can energize the economy by venturing into new markets through creative, innovative ideas. While the IBK has supported SMEs like an umbrella, its affiliate IBK Venture Investment will work to invigorate the venture capital market,” IBK Venture Investment CEO Cho Hyo-sung said.

Cho is an investment banking veteran, having worked as head of the strategic investment division at SKS Private Equity under SK Securities and also at Kiwoom Asset Management and Mirae Asset Securities.

“In an era of global rivalry for tech hegemony, tech competitiveness is a prerequisite for a country’s survival. We will put in all efforts to support startups with outstanding technology and potential to strengthen the tech competitiveness of Korea,” Cho said.