Ministry of SMEs and Startups Announces Legislative Notice for Venture Investment Act Until the 6th of Next Month

[Asia Economy Reporter Moon Hyewon] The Ministry of SMEs and Startups announced on the 25th that it has prepared the enforcement decree and enforcement rules draft of the "Act on Promotion of Venture Investment" (hereinafter referred to as the Venture Investment Act) to create a private sector-led venture ecosystem, and will publicly notify the legislation from the 26th until the 6th of next month.

The Venture Investment Act is a newly enacted law that integrates the investment systems scattered across the "Small and Medium Enterprise Startup Support Act" and the "Venture Business Act" into a standalone bill. The core content recognizes and fosters venture capital and angel investors as key players in the venture ecosystem. Within the delegated scope of the bill, it focuses on breaking down boundaries among participants in the venture investment market and enhancing investment autonomy. It is scheduled to take effect on August 12.

Until now, the roles and work areas of investment participants such as startup investment companies and accelerators were clearly distinguished, but mutual areas will be opened to allow a certain level of competition among them.

Securities companies and asset management companies will also be allowed to establish venture investment associations as joint operators with venture capital firms such as startup investment companies, promoting collaboration between venture capital and the capital market in the later growth stages.

Additionally, the qualification of general partners in personal investment associations, which was previously limited to individuals and accelerators (startup planners), will be expanded to include startup investment companies and limited liability venture investment companies that concurrently operate as startup planners.

Accelerators will be permitted to form and operate venture investment associations if they secure paid-in capital of at least 1% of the association formation amount, enabling them to attract investment funds from institutions such as pension funds and corporations.

Startup investment companies will be fully allowed to hold accelerators, special purpose acquisition companies, and others to expand their roles in investment and nurturing-related areas.

Furthermore, the minimum capital required for registering a venture investment association will be lowered from 3 billion KRW to 2 billion KRW, and the professional individual investor system will be changed from a confirmation system that re-verifies qualifications every two years to a registration system where qualifications are continuously maintained as long as requirements are met, lowering entry and maintenance barriers for investment participants.

Kim Jusik, head of the Venture Investment Division at the Ministry of SMEs and Startups, said, "Last year, venture investment reached 4.2777 trillion KRW and angel investment 553.8 billion KRW (as of 2018), both breaking all-time records, signaling the start of a second venture boom. With the enforcement of the Venture Investment Act, we expect to stimulate private investment once again by breaking down boundaries among venture investors and enhancing investment autonomy during the preparation of subordinate legislation."

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