South Korea's Metaverse Fund Accelerates Homegrown
With the help of the Metaverse Foundation, South Korea will support mergers and acquisitions of various companies from the Metaverse ecosystem.
While some global economies have been distracted by price volatility and excitement around the collapse of the crypto ecosystem, South Korea has doubled down on the metaverse’s potential as a new economic growth engine.
South Korea has launched a “Metaverse Fund” to encourage and expedite domestic initiatives in developing virtual worlds and augmented reality (AR) applications. The fund has been set up as part of the South Korean government’s larger plan to develop the metaverse industry as a key pillar of the national economy.
The South Korean government believes that the metaverse industry has the potential to create new growth engines for the Korean economy, as it can not only provide entertainment and gaming services but also transform various industries such as education, healthcare, and e-commerce.
The government agrees that raising capital through private investment will be difficult for local actors, given the underlying investment risks. As a result, in addition to mergers and acquisitions, South Korea intends to help domestic metaverse companies compete with global players, adding, “We plan to actively support this.”
In January, Seoul launched a digital replica of the city in the metaverse. As reported, the South Korean government spent roughly 2 billion won ($1.6 million) for the first phase of the metaverse project.
However, South Korea still controls cross-border threats in the physical world. In February, the country announced its first independent sanctions related to cryptocurrency theft and cyberattacks against certain North Korean groups and individuals.
The Ministry of Science and ICT, the Ministry of Culture, Sports and Tourism, and the Korea Creative Content Agency jointly operate the fund. It has a total of KRW100bn ($90m). It will provide financial support to small and medium-sized enterprises (SMEs) and startups in the metaverse industry, including content creators and platform providers.
The fund will offer various support programs, including investment in early-stage startups and establishing joint investment funds with venture capital firms. The government plans to attract more foreign investment and collaboration by showcasing the country’s cutting-edge metaverse technologies and infrastructure.
Experts estimate that the global metaverse market will grow significantly in the coming years, with major technology firms like Facebook and Microsoft investing in the industry. According to a study by Swiss investment bank UBS, the global metaverse market could reach $800bn by 2025.
South Korea has already been an active player in the metaverse industry, with its gaming and mobile tech giants such as Kakao Games, Naver, and SK Telecom ramping up investment in the sector. The government recently established a Metaverse Alliance with major Korean companies and academic institutions to foster the industry’s growth.
Despite the potential benefits, some experts have raised concerns about the metaverse industry’s impact on society and privacy. Some have pointed out that it could exacerbate inequality and addiction problems and that regulation and ethical guidelines will be crucial in shaping the industry’s development.
Launching the Metaverse Fund is a significant step towards establishing South Korea as a leading player in the metaverse industry. It shows the government’s commitment to supporting domestic startups and SMEs and fostering innovation in the sector.