VC Funds are special purpose PEF established under the government policy to foster investments into small, medium and venture companies that lack credit and assets but have technologies with potential to growth. Many of these enterprises disappear without adequate funding so the government policy is directed toward attracting PEFs to provide funding to these small venture companies with tremendous potential for growth.

Unlike general purpose PEF's, the VC funds are not subject to the Financial Investment Services and Capital Markets Act but the they must comply with the specific rules and regulations under which the VC funds were formed. There are “small and medium enterprises start-up investment funds” under the Act on Support for Small and Medium Enterprises Establishment, “Korea Venture Funds” (KVF’s) under the Act on Special Measures for the Promotion of Venture Businesses, “new technology enterprise investment funds” under the Specialized Credit Finance Business Act, and “agricultural, fisheries, and food industry investment funds” under the Act on Formation and Operation of Agricultural, Fisheries, and Food Industry Investment Funds. These funds provide funding to small and startup entities in the areas of IT, communications, biotech and entertainments.