[2021 National Audit] 75% of Venture Capital Investments Supported by Policy Banks Are Located in the Seoul Metropolitan Area

Over 75% of Companies in the Seoul Metropolitan Area Applied to in the Past 5 Years

[Asia Economy Reporter Park Sun-mi] It has been confirmed that more than 75% of innovative venture companies supported by the policy banks KDB Industrial Bank and IBK Industrial Bank are located in the Seoul metropolitan area. There are calls for strengthening support for venture companies in non-metropolitan areas in terms of national balanced development and regional economic revitalization.

According to the investment support status for innovative venture companies and startups from 2017 to August this year, submitted by Industrial Bank and IBK Industrial Bank to Assemblyman Song Jae-ho of the National Assembly's Political Affairs Committee on the 14th, 75% of the companies invested by Industrial Bank and 80% by IBK Industrial Bank were located in the Seoul metropolitan area.

Over the past five years, Industrial Bank invested in a total of 246 innovative venture companies. Among them, 184 companies, accounting for 75%, were distributed in metropolitan areas such as Seoul, Gyeonggi, and Incheon. During the same period, IBK Industrial Bank invested in a total of 231 innovative venture companies, of which 185 companies, or 80%, were located in the metropolitan area.

Investment support for innovative venture companies centered in the metropolitan area has hardly improved over the years. In 2017, among 41 innovative venture companies supported by Industrial Bank, 30 were in the metropolitan area, with a ratio of 73% to 27% between metropolitan and non-metropolitan regions. However, this year, among 55 companies supported until August, 38 were in the metropolitan area, showing a ratio of 69% to 31% between metropolitan and non-metropolitan areas. Support for companies located in the metropolitan area is still more than twice as much.

This trend is the same for IBK Industrial Bank. In 2017, among a total of 25 venture companies invested in, 21 companies, or 84%, were concentrated in the metropolitan area. Since then, IBK Industrial Bank has supported metropolitan companies with a proportion exceeding 80%. This year, it is supporting 56 companies, of which 39 are metropolitan area companies, accounting for 70% of the total.

On the other hand, among the support methods provided to venture companies, 'loan-type investment,' which requires repayment obligation, was higher for companies located in non-metropolitan areas than in the metropolitan area. In the case of Industrial Bank, among the investment amount of 708.4 billion KRW in the metropolitan area over the past five years, common stock investment, which does not require repayment, accounted for 161.2 billion KRW or 22.8%. In contrast, in non-metropolitan areas, out of 153.3 billion KRW invested, only 6.687 billion KRW or 4.4% was common stock investment. IBK Industrial Bank had no common stock investment amount in non-metropolitan areas.

Assemblyman Song Jae-ho pointed out, "The core of fulfilling the era's task of national balanced development is regional economic development and regional industry revitalization. Therefore, actively fostering innovative venture companies in the regions is very important," and added, "It is problematic that policy banks, which should take the lead in realizing the principle of national balanced development, support innovative companies centered in the metropolitan area."

He continued, "Industrial Bank and IBK Industrial Bank should not only consider the limits of their capabilities or the perspective of profit and loss on investment but also take more active steps to ensure that innovative venture companies in non-metropolitan areas are not marginalized," and emphasized, "Support centered on common stock should also be increased so that newly established venture companies lacking capital can receive support without bearing excessive repayment burdens."

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