South Korea's Ministry of Science and ICT said on Monday it will recruit a fund manager until May 6 for a 30 billion won virtual convergence fund.

The government's contribution will be 18 billion won from reinvested returns. The fund will be formed at a minimum size of 30 billion won by adding at least 12 billion won from private investors. There will be no new government budget. The fund's name this year was changed to the virtual convergence fund from the metaverse fund.

The main investment targets are small and medium-sized firms with underlying virtual convergence technologies such as extended reality (XR), digital twins, AI and blockchain. Firms must meet at least 1 condition among overseas expansion, sales of AI-converged products and services, and mergers and acquisitions. At least 60 percent of total commitments must be invested in this category. Investments in existing shares of AI-converged and overseas-expansion firms will be recognized as main-purpose investments within a limit of 10 percent of total commitments.

Incentives for private investors will be selected from 3 methods identical to those of the cybersecurity fund. The options are preferential loss coverage of up to 15 percent of the fund-of-funds paid-in capital in the event of losses, and preferential profit distribution of up to 15 percent in the event of profits; payment of up to 30 percent of the fund-of-funds share upon achieving excess returns; and a call option of up to 30 percent of the fund-of-funds equity stake within the investment period of 4 years.

The fund started in 2014 as the Digital Content Korea Fund and has expanded into immersive content and the metaverse. By 2025, it formed sub-funds totaling 877.7 billion won, including 389.5 billion won in government commitments. Rainbow Robotics and Rableup are among the companies invested in by the fund.

Nam Cheol-gi (남철기), director general for software policy at the ministry, said virtual convergence technologies such as digital twins and XR are a key driver to accelerate AX across industries. He said the ministry will actively support promising virtual convergence small and medium-sized firms so they can grow into innovative companies that lead a major AX transformation.