Industrial Bank of Korea Launches Korea's First 'Equity-Type Rapid Investment Product'

The First in Korea After the Enforcement of the Venture Investment Promotion Act on the 12th... Serving as a Catalyst for the Korean New Deal

The Korea Development Bank (KDB) headquarters in Yeouido, Seoul, shows a quiet scene on the 20th, which General Motors (GM) headquarters referred to as the 'deadline' for Korea GM's court receivership. KDB is the second-largest shareholder, holding 17% of Korea GM's shares. However, out of the 10 board members, only 3 represent KDB, making it difficult to prevent GM headquarters from pushing forward with court receivership. Lee Dong-geol, chairman of KDB, stated that if GM headquarters unilaterally places Korea GM under court receivership, they will take legal actions such as lawsuits. Photo by Moon Honam munonam@

[Asia Economy Reporter Kangwook Cho] The Korea Development Bank announced on the 31st that it will launch the country's first equity-type rapid investment product in response to changes in the venture investment market trends.

This product introduces the Simple Agreement for Future Equity (SAFE), which started in Silicon Valley, USA in 2013, adapted to domestic conditions. It allows rapid investment in promising startups without valuation, and the stock issuance price is determined based on the valuation linked to subsequent investment rounds. The requirements for SAFE were reflected following the enforcement of the Act on Promotion of Venture Investment on the 12th of this month.

With the launch of this product, startups can receive investments quickly, and since the stock price is determined according to the price of subsequent investments, they can focus on enhancing corporate value. Additionally, as this product is designed in an equity-type structure, it offers the advantage of contributing to startups' capital expansion and financial soundness.

The target companies are those with excellent technology within 7 years of establishment (TCB technology evaluation grade TI4 or higher), and the investment limit is 2 billion KRW per company. The price is determined considering the investment period at the time of subsequent investment attraction.

Earlier, on April 24, the Korea Development Bank proactively launched the country's first 'growth-sharing convertible bond' that omits valuation as part of the 'Startup Crisis Overcoming Support Program' implemented in response to the novel coronavirus disease (COVID-19). Through this product, 3 cases totaling 7 billion KRW have been invested so far, significantly shortening the investment screening period by focusing on technology and marketability review while resolving difficulties in valuation negotiations.

Amid a significant contraction in investment sentiment due to COVID-19, with domestic venture investment in the first half of this year decreasing by 17.3% compared to the same period last year, the Korea Development Bank raised a growth support fund of 6.1 trillion KRW to supply large-scale venture capital to small and medium-sized and venture companies (with cumulative investments of 2.3 trillion KRW as of the end of July this year). Additionally, it is raising an additional fund of 2.5 trillion KRW. Furthermore, including the Startup Crisis Overcoming Support Program, it has directly supported investment and financing of 326.8 billion KRW, which is 2.6 times the previous year's annual performance, up to this month.

A Korea Development Bank official stated, "In addition to the existing debt-type rapid investment product, we have secured a multi-dimensional rapid investment system with the launch of this equity-type rapid investment product. Through rapid support for promising startups, we will serve as the catalyst for the national project, the Korean New Deal policy, and based on the accumulated know-how of introducing advanced financial techniques, we will lead the domestic venture investment market."

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