KOSDAQ overhaul urged to attract long-term institutional funds for Korea's growth firms

In Seoul, Kim Hak-gyun, chairman of the Korea Venture Capital Association, argued that Korea’s stock market for growth companies, the KOSDAQ, must change its framework to attract long-term capital rather than rely mainly on retail investors. Speaking at a press briefing at the Westin Seoul in Gangnam on March 13, he said institutional investors should play a larger role to underpin the next wave of venture funding.

Kim called for a dedicated KOSDAQ-oriented institutional fund structure, proposing design options for government and financial institutions to operate a fund of roughly 30 trillion won annually for five years to support the market. He said such a mechanism is necessary if the government’s aims to expand venture investment are to take root in the market itself.

The VC association chief contrasted Korea with the United States, noting that Korea spends about 0.6% of GDP on venture investment and that post-listing fundraising accounts for roughly 0.34% of GDP. By comparison, the U.S. channels about 0.75% of GDP intoAlternative investments, and fundraising after listings on Nasdaq reaches about 1.28% of GDP, implying that KOSDAQ’s post-IPO capital inflows are only about a third of Nasdaq’s level.

Kim warned that for many Korean growth firms, listing on KOSDAQ is not the end of the fundraising journey but the beginning of an ongoing capital-raising phase. He said the market structure must be redesigned so that companies can continuously attract funds after going public, enabling more global-scale growth.

As a path to that goal, Kim proposed launching a KOSDAQ-specific institutional fund framework to channel long-term capital into both the primary market and aftermarket liquidity. He stressed that the association would not manage a fund itself but would keep pushing for a specialized institutional structure that could normalize the market’s exit and funding cycles.

Kim pointed to the rapid expansion of KOSDAQ’s market cap driven by policy and noted that over the past five years new listings have typically averaged 80 to 100 companies annually, with initial public offering sizes totaling about 12 to 15 trillion won. He cited government targets to grow venture investment to 40 trillion won by 2030 and argued that the corresponding exit market would need to respond at similar scales.

On the funding side, Kim highlighted the need for longer-term vehicles, noting that most Korean venture funds have eight-year horizons, shorter than what is needed to nurture startups into mature, globally competitive firms. He urged the development of decade-long funds, along with expanded use of secondary funds and third-party financing through mechanisms like the “Mother Fund,” to broaden and accelerate liquidity for existing investors.

For Korea to sustain growth after listing, he said, the country should consider tax incentives or R&D cost recognition to encourage M&A activity and other forms of corporate consolidation. Without such post-listing incentives, he argued, many firms might underexplore strategic acquisitions or partnerships that could magnify their scale.

Kim closed by arguing that improving Korea’s capital markets is not about pushing more listings for their own sake. In an era of technological leadership and geopolitical competition, he said the venture ecosystem and KOSDAQ must function as a global platform for growth, with a robust recovery and exit market that can support Korea’s aspiration to become a leading hub for tech innovations and investment.