'Foundation for the Second Venture Boom Expansion' Venture Investment Act Enforcement Decree Approved at Cabinet Meeting

Publication of explanatory materials and pre-briefing session on YouTube in line with the implementation on the 12th

[Asia Economy Reporter Kim Cheol-hyun] The Enforcement Decree of the Act on Promotion of Venture Investment (hereinafter referred to as the Venture Investment Act), which allows various private capital to flow into the venture investment sector, has passed the Cabinet meeting. It is expected to lay the foundation for the spread of the second venture boom by securing investor autonomy.

The Ministry of SMEs and Startups (Minister Park Young-sun, hereinafter referred to as the Ministry) announced that the draft Enforcement Decree of the Venture Investment Act, which stipulates matters delegated by the law following the enactment and promulgation of the Venture Investment Act on February 11, passed the Cabinet meeting on the 4th.

The Venture Investment Act, the first legislative bill proposed since the launch of the Ministry and set to be enforced on the 12th, integrates the investment systems scattered across the Small and Medium Enterprise Startup Act and the Venture Business Act into an independent law. It was prepared to enable various private capital to flow into the venture investment sector through the introduction of new investment systems and the relaxation of investment regulations.

The Ministry explained that this Enforcement Decree focuses on enhancing investment autonomy. In the case of venture investment associations, the restriction on follow-up investments in the same company has been abolished to allow additional investments according to the growth stage of the company. This improves the current system where follow-up investments are generally impossible when a special relationship is formed between the association and the investee company by securing a certain shareholding by the venture investment association.

Additionally, to expand the connection between venture investment and the capital market in the later growth stage and create synergy, securities companies and asset management companies are now allowed to jointly establish and operate venture investment associations with venture capital firms such as startup investment companies. Accelerators can also form and operate venture investment associations if they secure paid-in capital of at least 1% of the association’s operating amount, enabling them to attract unlimited investment funds from institutions such as pension funds and corporations.

The investment obligation for founders and venture companies has been improved from being imposed on each fund to being imposed on the total amount of assets under management per company, allowing strategic portfolio composition by fund. For example, when managing two funds, one can focus on investing in startup companies while the other concentrates on follow-up investments, enabling strategic management. Kim Ju-sik, head of the Venture Investment Division at the Ministry, said, "Last year, venture investment surpassed 4 trillion won for the first time with 4.3 trillion won, setting a record high, marking the point when the second venture boom is fully realized. The enforcement of this Venture Investment Act will be a catalyst."

Meanwhile, the Ministry plans to publish explanatory materials to make the Venture Investment Act easily and conveniently accessible to stakeholders and will hold an online live YouTube pre-briefing session on the 5th.

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