Ministry of SMEs and Startups: "Expand Venture Fund to 20 Trillion Won with Private and Overseas Capital"…Industry Calls It "Timely"

Announcement of Measures to Revitalize Venture Investment
"Incentives and Expansion of Global Funds"
"Saudi Minister Visits COMEUP Event"

Lee Young, Minister of SMEs and Startups, is speaking at the Emergency Economic Ministers' Meeting held on the 4th at the Government Seoul Office in Jongno-gu, Seoul. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Kim Bo-kyung] As the venture investment market freezes due to worsening domestic and international economic conditions, the government announced plans to revitalize the investment market by attracting private and global capital. The industry praised it as a "timely measure." However, expanding the reduced mother fund budget and improving laws and systems to increase investment remain additional challenges.

On the 4th, Lee Young, Minister of SMEs and Startups, announced the "Dynamic Venture Investment Ecosystem Creation Plan," consisting of △strengthening venture investment incentives △establishing private venture mother funds △attracting global capital at an emergency economic ministers' meeting.

Afterwards, a policy briefing session was held at Tipstown in Yeoksam-dong, Seoul, targeting policy stakeholders such as the venture capital (VC) industry and startup sector. The minister explained the detailed support contents and future plans.

The Ministry of SMEs and Startups expects that this measure will increase the market's venture fund formation capacity by about 2 trillion won. The goal is to expand the venture fund formation scale from the current 6 trillion won level to 8 trillion won. Specifically, △private venture mother funds 1.5 trillion won △private equity fund capital inflow 200 billion won △overseas capital attraction 200 billion won △system improvement 100 billion won, etc.

Industry officials gave an overall positive evaluation of the measure. Ji Seong-bae, chairman of the Korea Venture Capital Association, said, "As a member participating in the venture investment market, I am grateful that the long-standing issues of the investment industry are finally bearing fruit."

Kim Jong-pil, CEO of KB Investment, said, "I want to say this is a timely measure," adding, "The market moves with investment and exit flows, and concerns on both sides of the market were becoming a reality."

Kim Dong-hwan, CEO of Hana Ventures, said, "Funds created during recessions have shown record-high returns," and "LPs (investors) who participated at that time will be able to recover with good returns."

However, the tax law amendment bill to provide incentives will be implemented from the end of next year, and amendments related to multiple voting rights and corporate venture capital (CVC) remain pending tasks.

Lee Young, Minister of SMEs and Startups, is speaking at the Emergency Economic Ministers' Meeting held at the Government Seoul Office in Jongno-gu, Seoul on the 4th. Photo by Hyunmin Kim kimhyun81@

Choi Sung-jin, CEO of Korea Startup Forum, said, "The industry has felt the cold of mid-summer to mid-winter this year," adding, "There was a widespread perception that an economic crisis had arrived, and the first was the contraction of investment sentiment." He expressed concern about the cut in the mother fund budget, saying, "Even capable and growing startups can fall into difficulties due to temporary investment contraction." Next year's Ministry of SMEs and Startups mother fund budget is 313.5 billion won, nearly 40% less than this year's 520 billion won.

CEO Choi urged prompt revision of laws to activate multiple voting rights and CVC, saying, "Institutional improvements not included in this measure are necessary." He emphasized, "Although CVC is being activated, there are parts that were restricted by law changes two years ago," and "The issue of investment limits also needs additional improvement."

In response, Minister Lee said, "The mother fund decreased by about 200 billion won compared to last year, but more than half of the mother fund budget over the past five years was supplementary budget (supplementary budget). We need to look at the total amount including the supplementary budget."

He added, "We have done everything possible to pass the CVC bill. We need to ease the rigidity of investment," and "We will do our best to allow multiple voting rights and CVC to move toward the flexible situation the industry desires."

Regarding attracting global capital, Minister Lee announced that Khalid Al-Faleh, Saudi Arabia's Minister of Investment, will visit the global startup festival "Come up 2022" held next week.

He said, "The Saudi Minister of Investment is coming to Come up. The role of the investment ministry is to attract foreign funds domestically, but Saudi Arabia's investment ministry is somewhat different," adding, "As Saudi Arabia is implementing 'Vision 2030,' provisions allowing global investment have been created, so they will attempt various global networks."

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