[2021 National Audit] "Angel Investment Matching Fund Repayment Interest Rate 12%... Disadvantageous to Entrepreneurs"

[Asia Economy Reporter Kim Bo-kyung] Among the investment cases of the Angel Investment Matching Fund managed by Korea Venture Investment Corp., it has been revealed that there are excessively unfavorable conditions for founders in terms of dividend yield, redemption interest rate, and redemption demand date.

According to data submitted by Korea Venture Investment Corp. to Hong Jeong-min, a member of the National Assembly's Industry, Trade, Energy, Small and Medium Enterprises Committee from the Democratic Party of Korea, on the 14th, the redemption interest rate of the Angel Investment Matching Fund was found to reach up to 12%.

The Angel Investment Matching Fund operated by Korea Venture Investment Corp. is a fund where angel investors first invest in early-stage startups and then apply for matching investment. The angel investors evaluate the company and, through a review of special matters, match and invest accordingly.

Examining the terms of convertible redeemable preferred shares of the Angel Investment Matching Fund, it was found that the detailed conditions vary greatly for each investment case, and some are considered excessive by industry standards.

Redemption interest rates of 8% or more per annum are easily found, and rates soar up to 12%. Although the contract maturity is 10 years, many cases allow redemption demands to be made starting just one year after the contract.

It was also revealed that these conditions differ significantly from those of other institutions making direct investments, such as the Small and Medium Business Corporation and the Korea Technology Finance Corporation. In the cases of the Small and Medium Business Corporation and Korea Technology Finance Corporation, the redemption interest rates are simple interest 5% and annual compound interest 5%, respectively, and the redemption demand period is set at a minimum of 2 to 4 years.

Assemblyman Hong said, "Under the pretext that there was an agreement between the company and the investor, Korea Venture Investment Corp. turned a blind eye to the favorable conditions created by investors and matched public funds accordingly," adding, "To improve the unfavorable investment conditions caused by information asymmetry between founders and investors, it is necessary to consider angel education and expanded disclosure."

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