Venture Business Association: "Mother Fund Size Must Reach 1 Trillion Won... Promoting Venture Globalization"

Venture Business Association, Press Briefing on the 6th
Announcing Key Initiatives and Government Recommendations
"Need for Liquidity Expansion and Export Support Measures"

The Korea Venture Business Association has expressed the position that the Korea Fund of Funds should be expanded to a scale of 1 trillion won. They plan to promote the globalization of venture companies by establishing intergovernmental joint matching fund investment organizations.

On the 6th, Seong Sang-yeop, president of the Korea Venture Business Association who took office in February, held a press conference in Yangjae-dong, Seoul, to announce the tasks to be pursued this year and proposed measures to revitalize venture investment.

Last year, venture investment decreased by 11.9% (916.2 billion won) compared to 2021, and market uncertainties continue with delays and withdrawals of IPOs by promising venture companies and reduced investments by venture capital (VC) firms.

President Seong predicted, "Due to recent interest rate hikes, contraction of the venture investment market, and the bankruptcy of the US SVB, domestic and international economic uncertainties will exacerbate funding difficulties for venture companies."

He stated, "To revitalize venture finance, the Korea Fund of Funds should be expanded to a scale of 1 trillion won to send a positive signal to the venture investment market and serve as a primer." This year, the size of the Korea Fund of Funds is around 300 billion won, which is about 40% of last year's level.

The association suggested expanding low-interest policy funds for venture companies experiencing temporary liquidity shortages and increasing liquidity supply through policy finance such as investment-linked guarantees by the Korea Technology Finance Corporation (Kibo).

They also emphasized the need to establish intergovernmental joint matching fund investment organizations. The 'BIRD' model, a US-Israel venture cooperation model established in 1977, is a representative example. The association proposed creating matching funds through joint investments between Korea and the US, and Korea and Japan, and utilizing them as financial platforms for investment, financing, and M&A of innovative companies between the two countries. They suggested that the respective countries jointly invest to create funds, with private investors participating in each cooperation model.

They also proposed increasing the support ratio for small and venture companies through 'export factoring' to up to 10%. Export factoring is a financial product where the Export-Import Bank purchases export receivables generated from companies' credit export transactions on a non-recourse basis. However, over the past five years, the proportion of support provided to small and venture companies through export factoring was only 1.28%.

Furthermore, they recommended establishing a Primary Collateralized Bond Obligation (P-CBO) venture-exclusive support system so that small and venture companies can raise funds through direct financing such as corporate bonds.

President Seong emphasized, "Globalization is an essential task to achieve both quantitative and qualitative growth of domestic venture companies," adding, "At a time when the government is focusing on global expansion policies, comprehensive support to activate exports by venture companies is necessary."

To promote venture globalization, he suggested ▲attracting global technology experts ▲supporting global investment attraction ▲private global cooperation ▲supporting entry into overseas public procurement markets.

President Seong stated, "We will complete a private-sector-led venture ecosystem and strengthen solidarity with related private associations and organizations in supporting venture companies, leading roles such as developing policy agendas and making government proposals."

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