Ministry of SMEs and Startups to Support Technology-Intensive Small and Medium Ventures

[Asia Economy Reporter Donghyun Choi] The Ministry of SMEs and Startups announced on the 10th that it has finalized the business plan for this year's 'Investment-type Technology Development' and will announce the support plan for promising SMEs and startups through the dedicated operator track (Scale-up TIPS) starting from the 15th.

Investment-type technology development differs from the existing grant-based technology development in that when venture capitalists (VCs) make pre-investments linked to the investment market, the government follows up with matching investments. The Ministry of SMEs and Startups plans to gradually expand investment-type technology development to about 10% of its technology development budget by 2025. It aims to brand this as a market-friendly technology development support project led by the private sector.

Since its establishment in July last year, investment-type technology development has expanded its budget and made matching investments of 37 billion KRW in 29 promising SMEs and startups. Scale-up TIPS supports investment-type technology development through dedicated operators. When an operator discovers promising companies, makes prior investments, and recommends them, the government supports scale-up throughout the entire cycle through matching investments.

In November last year, the Ministry selected five operator consortiums. This time, after investment review of companies pre-invested and recommended by operators, matching investments totaling 5.5 billion KRW were supported for four companies. All four selected companies possess excellent business performance and technology development potential, and will be supported for scale-up in connection with grant-based technology development within this month.

This year's business plan focuses on activating Scale-up TIPS and launching policy-designated projects that promote challenge and innovation. Regarding Scale-up TIPS operators, about 10 additional operators will be selected in the first and second halves of the year. Scale-up TIPS will be operated through processes such as 'allocation of recommendation rights → company recommendation and support → performance evaluation.'

Additionally, when results are achieved, a call option of up to 60% on government equity will be granted, allowing companies to conduct challenging technology development without concerns about equity dilution, while investors can secure additional profits. Various programs will also be conducted to activate the dedicated track league and promote cooperation and communication.

Since bold concentrated investment is necessary for technologies with a high failure rate but expected significant economic ripple effects, support linked to investment will also be promoted for challenging and innovative technology development projects of SMEs and startups.

Meanwhile, the Ministry of SMEs and Startups plans to announce the Scale-up TIPS support plan for investment-type technology development on the 15th and hold an integrated briefing session both online and offline together with operators.

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