Venture Capital Market Trust Rises... Association Announces Plan to Operate Self-Regulation

KVCA Holds Briefing on Venture Capital Self-Regulation Program
Introduction of Code of Ethics, Internal Control Standards, and Excellent VC Evaluation System
Aiming to Enhance Transparency and Build Trust in the Industry

The venture capital industry is set to fully launch a self-regulation program to foster a healthy market environment.

The Korea Venture Capital Association (KVCA) held a "Venture Capital Self-Regulation Program Operation Plan Briefing" on the 4th at the Startup Hall of the Korea Venture Investment Building. Provided by KVCA

The Korea Venture Capital Association (KVCA) announced on the 5th that it held a "Venture Capital Self-Regulation Program Operation Plan Briefing" on the 4th at the Startup Hall of the Korea Venture Investment Building.

At the briefing, the KVCA presented the operation plan for the self-regulation program and shared key contents including ▲Code of Ethics ▲Internal Control Standards ▲Revision of Conflict of Interest Prevention Guidelines ▲Introduction of an Excellent VC Evaluation System. Although the Code of Ethics and Internal Control Standards had not undergone follow-up work since their revision in 2016, the recent update added new elements such as ▲establishment of personal investment standards for executives and employees ▲expansion of confidentiality obligations ▲provision of a standard NDA (Non-Disclosure Agreement) template. Additionally, the revision of the Conflict of Interest Prevention Guidelines introduced ▲strengthened procedures to prevent conflicts of interest during investment decision-making ▲guidelines to enhance transparency between investors and management companies.

An excellent company evaluation system and incentive support measures were also introduced to promote the spread of self-regulation within the industry. Venture capital firms wishing to be evaluated as excellent will undergo document screening and on-site evaluation annually, receiving one of six grades. This is an absolute evaluation method with a validity period of two years. Venture capital firms receiving high evaluations can benefit from advantages such as receiving additional points during the Mother Fund investment screening or leniency during disciplinary actions. Other benefits include public disclosure of the list of excellent venture capital firms and commendations from the Ministry of SMEs and Startups. The KVCA is also discussing with other investors the possibility of awarding additional points during investment screenings.

Despite the introduction of various investment methods and structures, the industry has faced criticism for lacking a system that can respond quickly and flexibly to market changes. Calls for the expansion of self-regulation, where norms are established and practiced autonomously, have grown louder. The briefing was attended by compliance officers of venture capital firms, executives and employees of investors, and other industry stakeholders to discuss the necessity, effectiveness, and specific operation plans of self-regulation.

The KVCA plans to distribute the revised guidelines, provide a preparation period, and announce the excellent VC evaluation in August to September this year. They aim to establish an effective self-regulation system through periodic feedback and improvements.

Yoon Geon-su, Chairman of the KVCA, stated, “The introduction of the self-regulation program will significantly enhance the transparency of the venture capital market,” and added, “We hope this briefing will contribute to investor protection and strengthening trust within the industry.”

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