[Exclusive] "Looking Beyond Financial Statements for Future Value"... IBK Injects 170 Billion Won into 72 Innovative Companies

IBK Industrial Bank of Korea has provided approximately 170 billion won in support to 72 companies over the past three years that demonstrated high growth potential but lacked strong business performance. This was achieved through the Future Growth Potential Deliberation Committee, which was established on the belief that traditional loan screenings centered on financial statements are limited in assessing a company's growth potential, and to evaluate companies based on their technological capabilities and growth prospects. The bank also plans to accelerate the early identification of promising future companies by supplying 1 trillion won in venture capital this year.

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According to the financial sector on April 30, IBK Industrial Bank of Korea has supported a total of 72 companies with 169.7 billion won from February 2023, when the program was launched, through March this year. The Future Growth Potential Deliberation Committee was introduced to discover and support companies with high growth potential that struggle to secure funding due to weak business performance. The average amount of support per company stands at about 2.3 billion won.

Traditionally, corporate lending reviews have focused on financial statements. Reviews are conducted based on quantitative indicators such as business performance, cash flow, and real estate collateral. However, this approach has faced criticism for its limitations in selecting companies that possess technological capabilities but lack sufficient collateral or strong performance. The Future Growth Potential Deliberation Committee was established to move away from evaluation methods focused on credit ratings and collateral, and instead conduct comprehensive assessments of companies based on technology, business viability, and growth prospects.

The screening process is meticulously managed. In the preliminary review, technological capabilities are verified, and in the main review, company representatives directly explain their business achievements and innovation at the "Company Briefing (FLC Day)." In particular, external experts such as venture capital (VC) and accelerator (AC) professionals also participate to enhance objectivity. The evaluation is conducted by a total of seven internal and external committee members, who comprehensively assess a company's growth potential. Internally, two loan screening officers and two technology evaluation committee members participate, while three external experts from the fields of investment, law, and consulting are included. The external expert pool consists of around 70 individuals, supplementing the objectivity and expertise of the evaluations. A senior official at IBK Industrial Bank of Korea emphasized, "There are areas that simply cannot be seen by financial statements alone," and added, "IBK Industrial Bank of Korea is taking the lead in upgrading qualitative evaluations based on its long-standing experience in productive finance."

In line with the government's policy of promoting productive finance, support for early-stage startups will also be significantly expanded. IBK Industrial Bank of Korea plans to invest a total of 3.5 trillion won in venture capital between this year and 2028, including 1 trillion won to be injected into the venture investment market just this year. Venture capital refers to funds invested in early-stage and innovative companies with high growth potential, accepting higher risks in exchange. Another senior official at IBK Industrial Bank of Korea explained, "Venture capital investment is not determined by financial statement numbers," and added, "We focus on evaluating the management mindset of the representative and the company's unique technological capabilities, which cannot be captured by quantitative indicators."

Internally, the bank has completed the development of a "New Technology Evaluation System" utilizing big data and artificial intelligence (AI) to discover innovative companies. The core function of this system is to assess a company's growth potential based not only on financial statements, but also on various non-financial data such as technological capabilities, employment status, and research and development (R&D) investment. The New Technology Evaluation System is expected to enhance the effectiveness of support for small and medium-sized enterprises (SMEs), as it will be used not only for technology finance screening, but also for IBK venture loans and the selection of companies for the startup incubation platform "Changgong."

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