Democratic Party's 2nd Pledge: Nurturing 30 'Unicorns' Worth Over 1 Trillion Won

Lee Hae-chan, leader of the Democratic Party of Korea, is attending the Supreme Council meeting held at the National Assembly on the 20th and delivering a speech. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Park Cheol-eung] The Democratic Party of Korea has announced its second major election pledge to realize a 'venture powerhouse' by expanding the number of unicorn companies (startups valued at over 1 trillion KRW) from the current 11 to 30.

On the 20th, the Democratic Party unveiled its venture promotion pledge, which includes nurturing 30 K-unicorn companies by 2022, achieving annual venture investment of 5 trillion KRW, and establishing long-term investment funds with exclusive income tax deductions for KOSDAQ and KONEX markets.

As of the end of last year, the number of unicorn companies stood at 210 in the United States and 102 in China. The Democratic Party assessed that "although Korea's venture investment ratio relative to GDP increased significantly from 0.08% in 2017 to 0.19% in 2018, it remains low compared to the US and the emerging competitor China, necessitating more aggressive investment."

Alongside expanding unicorn companies, the party plans to establish a 'Fast Track' program to select 200 promising venture companies annually and nurture them into unicorn candidates.

They will institutionalize the 'Pre-Unicorn Special Guarantee,' which provides up to 10 billion KRW in support if a company is judged to have high potential to grow into a unicorn despite operating at a deficit, increasing the scale from 163.2 billion KRW last year to 200 billion KRW this year.

A large-scale scale-up dedicated fund will also be created. To promote the growth of innovative companies, a growth support fund worth 12 trillion KRW will be established over four years.

The government will inject over 1 trillion KRW annually into the mother fund, which acts as a catalyst for venture investment, aiming to achieve an annual venture investment amount (including the private sector) of 5 trillion KRW. Plans to establish a fintech innovation fund worth 300 billion KRW were also announced.

The tax-exempt limit on stock options will be gradually increased from the current 30 million KRW per year to 100 million KRW by 2022. Additionally, the sunset date for income tax deductions (30-100%) on angel investor venture investments and capital gains tax exemptions, which expire at the end of this year, will be extended by three years until the end of 2023.

A multiple voting rights system will be introduced exclusively for unlisted venture companies, allowing founders to issue shares with up to 10 voting rights per share with shareholder consent.

The Democratic Party stated, "As the venture loan market is reorganized from primarily real estate-secured loans to movable property and technology finance, capital procurement for technology innovation companies will become easier. Through these changes, a fertile ground will be established for the emergence of numerous technology innovation SMEs and unicorn companies, enabling Korea to leap forward as a bona fide ‘Top 4 Venture Powerhouse’."

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