Excellent Technology Companies Accelerate 'Commercialization'... Integrated Consulting and R&D Support Program Launching Next Year

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[Asia Economy Reporter Moon Chaeseok] The Ministry of Trade, Industry and Energy announced that starting next year, it will actively promote the 'Scale-up Technology Commercialization Program,' which provides integrated support for commercialization consulting and research and development (R&D) to prevent the failure of excellent technology companies in commercialization.

On the 26th, the Ministry of Trade, Industry and Energy stated that this program, with a total project cost of 192.5 billion KRW, has passed the preliminary feasibility study by the Ministry of Economy and Finance. The project will be officially operated starting with the announcement of participating companies for the first phase in the first quarter of next year.

This project is a follow-up to the Ministry's representative technology commercialization program, the 'Technology Development Linked to Commercialization Project.' From 2005 to this year, the Technology Development Linked to Commercialization Project invested 675.8 billion KRW (437.4 billion KRW in government funds) over 16 years to support technology development and market entry for 1,037 companies.

This time, the support areas, participation conditions, and evaluation factors have been subdivided to ensure that excellent technologies lead to commercialization.

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First, the support target, which was previously all sectors, has been narrowed down to manufacturing companies. Specifically, ▲ unlisted manufacturing SMEs with more than 3 years of business experience, and ▲ companies pursuing projects in the 20 new industry sectors within the 5 major areas selected by the Ministry of Trade, Industry and Energy. These companies will receive up to 1.1 billion KRW in commercialization funds over three years.

The characteristics of this project are ▲ stepwise support from 'commercialization consulting → R&D,' ▲ package promotion of 'business model planning, venture capital (VC) investment attraction, and R&D,' and ▲ implementation by combining private capital and government funds.

Companies supported in the first phase of commercialization consulting receive up to 100 million KRW for one year. Only the top 80% of companies in performance evaluations, including business portfolio and VC investment attraction achievements, receive up to 1 billion KRW in second-phase R&D funds for two years.

By supporting technology commercialization as a package, participating companies receive business model planning support through 1:1 matched commercialization specialized institutions, including intellectual property, certification, regulation, accounting, and legal advice. The commercialization specialized institutions consist of a pool of commercialization specialized companies, technology transfer organizations, technology evaluation agencies, testing and certification institutions, public research institutes, law firms, and accounting firms.

To help participating companies smoothly raise funds in the financial market, investment attraction consulting such as IR (Investor Relations) strategy establishment is supported through VCs. Companies can freely select R&D tasks necessary to improve technology completeness and develop additional technologies, receiving package support for the entire technology commercialization process from business model planning to technology advancement.

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It is also notable that the project is implemented by combining private and government funds. At least 700 million KRW, which is 70% of the 1 billion KRW government support, must be raised through VC investment as a mandatory condition for selection as a second-phase 'R&D support target.' This policy is designed to increase the likelihood of commercialization success and create synergy by adding government commercialization funds to plans validated for business feasibility in the private market.

Noteworthy is the fact that the investment attraction scale condition has been raised from 55% or more compared to existing government grants to 70% or more. The predecessor project, Technology Development Linked to Commercialization Project, achieved results such as new employment and patents through business feasibility verification and commercialization support via private capital. This time, by strengthening investment attraction conditions and providing phased support through competition, higher commercialization outcomes are expected.

As a result, supported companies will secure R&D funds worth about 2 billion KRW, including government support. This consists of 1 billion KRW government R&D funds, 700 million KRW raised from private VCs, and 300 million KRW self-contribution (for SMEs, self-contribution is about 33% of government support). This provides the necessary funds to overcome the "death valley" (growth stagnation period between 1 to 3 years after startup) encountered during commercialization.

Kim Yongrae, Director of the Industrial Technology Innovation Office at the Ministry of Trade, Industry and Energy, said, "Our manufacturing industry is currently facing growth stagnation due to the limitations of the previous quantitative catch-up strategy, and it is time to overcome the crisis by promoting new businesses based on innovative technologies." He added, "I hope manufacturing companies struggling due to recent difficulties such as the COVID-19 pandemic will quickly respond to environmental changes, improve their business structure, and seize the opportunity to secure an advantage in innovation competition."

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