'Venture Investment Promotion Act' to be Enforced This July... Startup Planners Also to Form Venture Funds

Passage of 12 Bills under the Jurisdiction of the Ministry of SMEs and Startups in the National Assembly Plenary Session

[Asia Economy Reporter Kim Daeseop] The "Act on the Promotion of Venture Investment," which relaxes and integrates regulations on the venture investment system to activate investments in startups and venture companies, will be enforced in July this year. Additionally, the Framework Act on Small Businesses, which consolidates policies related to small business owners that were previously scattered across individual laws or various ministries and establishes small business owners as an "independent policy domain," will be enforced in January next year after a one-year grace period.

Twelve bills under the jurisdiction of the Ministry of SMEs and Startups, including the Act on the Promotion of Venture Investment and the Framework Act on Small Businesses, passed the National Assembly plenary session on the 9th. First, regarding the Act on the Promotion of Venture Investment, the "Simple Agreement for Future Equity (SAFE)" system, widely used in Silicon Valley, USA, for early-stage startup investments, was legally defined for the first time to expand investments in startup companies.

Also, for startup planners (accelerators) who discover, invest in, and nurture early-stage startups, the system was improved to allow the formation of venture funds (venture investment associations) if certain qualification requirements are met, enabling accelerators to engage in more venture investments. The Act on the Promotion of Venture Investment had previously been dispersed across the existing Venture Business Act (enacted in 1997) and the Small and Medium Enterprise Startup Act (enacted in 1986) to align with the Fourth Industrial Revolution era.

The amendment to the Special Measures for the Promotion of Venture Businesses also passed the National Assembly plenary session this time. The entity responsible for certifying venture businesses was changed from public institutions such as the Korea Technology Finance Corporation to the private sector, and the certification requirements were reorganized to focus on innovation and growth potential. Accordingly, it is expected that promising companies with high growth potential will find it easier to be certified as venture businesses.

Regarding the Framework Act on Small Businesses, the main contents include the establishment of the Small Business Policy Deliberation Committee to review small business policies. A specialized research and evaluation institution will also be established to conduct surveys, research, and evaluations necessary for the formulation of small business policies. A systematic support system, including digitalization support, will be prepared to quickly respond to new consumption and distribution trends.

Park Young-sun, Minister of SMEs and Startups, said, "We will continuously support small business owners so that they can be the foundation of our economy and a proud subject of growth," and added, "We will also promptly prepare subordinate statutes of the Act on the Promotion of Venture Investment to support the continuous expansion of venture investments, including unicorn companies."

This content was produced with the assistance of AI translation services.