[K Startup Great Transformation] "Government Should Encourage M&A to Boost Exit Activities"

Interview with Cha Jeonghun, Director of Startup Venture Innovation Office at Ministry of SMEs and Startups
Activation of Venture Investment Market Depends on M&A
Policies Must Support Building Confidence That Startups Can Succeed

[Asia Economy Reporter Kim Heeyoon] Cha Jeonghoon, head of the Startup Venture Innovation Office, known as the 'CTO' (Chief Technology Officer) within the Ministry of SMEs and Startups, is an on-site expert who personally experienced corporate innovation growth and the trends of the 4th Industrial Revolution while serving as an executive at NVIDIA, the world's No. 1 software company in Silicon Valley. In an interview with Asia Economy on the 27th, he emphasized that the background of the second venture boom lies in the exceptional 'persistence' of Korean entrepreneurs and that it is now necessary to create an environment that nurtures the ecosystem through larger forms of investment.

Cha analyzed that despite the impact of COVID-19, the surge in investment in ventures and startups is due to the secured investment capacity through a 6.6 trillion won fund established last year, as well as the concentrated interest in information and communication technology and bio-medical fields, which gained attention in the post-pandemic era.

He particularly argued that for the startup ecosystem to expand and activate further, exits, especially M&A, are crucial. Cha stated, “The activation of the investment market fundamentally depends on M&A,” and diagnosed, “In Korea, due to negative perceptions, M&A is not active, making it more difficult for companies to exit, thereby blocking the virtuous cycle of investment → recovery → reinvestment.”

He added, “Government-level policy funds and tax benefits to encourage M&A, as well as improvements to dual-class voting rights and stock option systems, should be implemented together to make corporate exits more active.” Furthermore, he explained that for active M&A, it is more important than anything else to move away from the traditional large-corporation-centered vertical industrial ecosystem and foster active collaboration with technology startups, securing outstanding talent, and creating an R&D environment for innovative technology development.

Cha emphasized, “Instilling confidence in the younger generation that ‘you can succeed even by working at startups’ is an important aspect that startup policies should address.” This is based on the analysis that if the perception is instilled that challenging startups can lead to faster success and benefit future careers more than stable jobs, more talented individuals will be attracted, enriching the ecosystem.

Additionally, to young people dreaming of starting a business, Cha advised cultivating imagination, maintaining curiosity about all problems to develop problem-solving skills, and accumulating knowledge about finance. He advised, “You should broadly understand financial knowledge such as investment, equity, and the structure of joint-stock companies and challenge entrepreneurship, which will be very helpful when the business grows bigger and will help prepare for unforeseen situations.”

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