Government Guarantees of 1.2 Trillion Won for Companies Under 3 Years... 2 Trillion Won Invested in Funds for Investment Purposes

Ministry of SMEs and Startups-Financial Services Commission, Customized Support by Business Growth Stage
Expansion of Guarantees, R&D, and Funds
Supporting Overseas Expansion, M&A, and Unicorn Growth

Minister Lee Young of the Ministry of SMEs and Startups (left) and Chairman Kim Ju-hyun of the Financial Services Commission are attending the National Agenda Inspection Meeting held at the Government Seoul Office in Jongno-gu, Seoul on the 20th. Photo by Yoon Dong-joo doso7@

A total of 10.5 trillion won in funds will be supplied to venture companies and startups facing a dry-up of capital due to high interest rates and economic slowdown. This is expected to be a much-needed relief for ventures and startups on the brink of collapse.

The Ministry of SMEs and Startups and the Financial Services Commission announced on the 20th the ‘Plan to Support Funding and Strengthen Competitiveness for Innovative Ventures and Startups.’ They stated that 6.1 trillion won will be invested in early growth-stage companies less than three years old, 1.9 trillion won in mid-growth-stage companies between three and seven years old, and 400 billion won in late growth-stage companies over seven years old.

◇Funding Lifeline for Early-Stage Companies... Guarantee and R&D Support= For early-stage companies with weak financial structures, the biggest problem has been the inability to secure funding due to increased interest burdens and difficulty obtaining bank loans amid economic slowdown. Accordingly, a total of 6.1 trillion won will be supplied to ease this.

The Korea Credit Guarantee Fund under the Financial Services Commission has established a special guarantee worth 600 billion won. This targets venture companies developing national strategic technologies and low-carbon technologies. The Korea Technology Finance Corporation under the Ministry of SMEs and Startups will also provide a special guarantee of 550 billion won to ventures, startups, and export SMEs in industries where investment has sharply declined. Both institutions will reduce guarantee fees by up to 0.5 percentage points and increase guarantee ratios. Shinbo and Kibo will jointly invest an additional 60 billion won in angel investments and regional innovation companies. Industrial Bank of Korea plans to establish a startup-related subsidiary with 100 billion won in support. Additionally, the Ministry of Science and ICT will support 4.7 trillion won in research and development (R&D) expenses in advanced industry sectors this year alone.

◇Tailored Guarantees and Overseas Expansion Support for Mid- and Late-Stage Companies= For mid-stage companies, Shinbo and Kibo proposed ‘growth fund policy guarantees (200 billion won)’ and ‘working capital policy guarantees (100 billion won).’ The supply of ‘low-interest venture loans’ will also be expanded. Loans will be provided at low interest rates to companies that have attracted investment, with a system allowing acquisition of rights to subscribe to new shares in the future. Previously, only Industrial Bank of Korea could provide up to 100 billion won, but now the Small and Medium Business Corporation will also handle up to 50 billion won.

For late-stage companies over seven years old, measures will be provided to support overseas market entry, mergers and acquisitions (M&A), and leapfrogging to unicorn status (unlisted companies valued at over 1 trillion won). The Korea Development Bank will establish a ‘Global Expansion Support Fund’ worth 300 billion won to support overseas expansion. To support M&A promotion, the Korea Development Bank and Industrial Bank of Korea will provide 100 billion won for consulting and acquisition financing. The ‘Global Unicorn Project Fund,’ jointly funded by Korea Venture Investment Corp and Korea Development Bank and backed by large-scale follow-up investments from overseas venture capital (VC), will also be launched to help domestic companies become global unicorns.

◇Processing of Multiple Voting Rights Law... Reducing Regulations= Regulations that hinder free corporate management will also be improved one after another. First, the scope of stock option grants will be expanded so that venture companies can employ various external experts. Previously, only holders of certain professional licenses such as lawyers could receive stock options, but going forward, experienced professionals and degree holders in related fields will also be eligible. This is planned to be implemented by the end of this year through the enforcement decree of the Venture Business Act. Expanding the scope of stock option grants will make it easier to recruit skilled technicians in relevant fields.

The long-awaited multiple voting rights bill, currently pending in the National Assembly’s Legislation and Judiciary Committee, will also be promptly processed. Multiple voting rights is a system that protects founders’ management rights while allowing companies to grow through large-scale investment without concerns about share dilution. It has already been introduced in advanced countries such as the United States and the United Kingdom.

Minister Lee Young of the Ministry of SMEs and Startups and Chairman Kim Joo-hyun of the Financial Services Commission are announcing the 'Measures to Support Funding and Strengthen Competitiveness of Innovative Venture Startups' on the 20th at the Government Seoul Office in Jongno-gu, Seoul. Photo by Yoon Dong-joo doso7@

Work is also underway to convert the ‘Special Measures for the Promotion of Venture Businesses (Venture Business Act),’ which is scheduled to sunset in 2027, into a permanent law. Kim Jeong-ju, head of the Venture Policy Division at the Ministry of SMEs and Startups, explained, "We plan to abolish the sunset clause of the Venture Business Act, which includes provisions on the stock option system, venture business certification system, and multiple voting rights, to provide stable support for venture companies."

◇Supporting Fund Recovery Measures to Keep Money Circulating in the Market= As IPO withdrawals have become frequent due to the stock market slump, secondary investments, another method of fund recovery (exit), will be encouraged. To this end, the secondary fund will be expanded from the existing 500 billion won to 1.5 trillion won by adding 700 billion won from the Korea Development Bank and 300 billion won from the Industrial Bank of Korea. Secondary funds invest in existing shares and have the effect of promoting follow-up investments. The obligation for secondary funds to invest at least 40% in new shares will be abolished to help venture investors recover funds quickly.

M&A will also be used as a means to keep money circulating in the market. Regulations related to M&A will be improved and financial support provided. The obligation for M&A purpose funds to invest in new shares will be abolished to facilitate the acquisition of shares in target companies. The regulation limiting M&A purpose funds’ investment in listed companies (up to 20%) will also be removed to make mergers through listed companies easier. These two changes are expected to be possible within this year through amendments to the enforcement decree of the Venture Investment Act. Additionally, Kibo will lead the establishment of a dedicated M&A support platform for SMEs by the end of this year. It will provide online matching between companies and guarantee up to 20 billion won per deal for M&A funds.

Lee Young, Minister of SMEs and Startups, said, "We will strictly monitor the situation and respond to minimize the impact of the venture investment slump." Kim Ju-hyun, Chairman of the Financial Services Commission, stated, "Having directly experienced the difficulties on the ground several times, we will execute funds with a sense of urgency."

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