Korea Financial Investment Association: "Expanded Eligible Investment Institutions Expected to Facilitate Fund Investment in Early-Stage Companies"

The Korea Financial Investment Association welcomed and expressed optimism about the inclusion of Kosdaq Venture Funds and private equity funds specializing in startups and venture companies among the eligible investment institutions for venture company certification, under the “Plan to Rationalize Regulations for Startups” announced by the Ministry of SMEs and Startups.

On October 23, the Ministry of SMEs and Startups held the second plenary meeting of the Regulatory Rationalization Committee and finalized a plan to improve the system, with a focus on expanding opportunities for companies to qualify as venture companies by attracting investment from the private financial sector. The Korea Financial Investment Association had previously proposed the matter to the ministry and the public-private joint regulatory rationalization task force, and had continued discussions with them. The relevant measures were included in the plan announced this time.

Under the current requirements for venture company certification, a company can qualify under the venture investment category if it raises at least KRW 50 million from an eligible investment institution and the investment represents at least 10% of its capital. However, funds managed by general asset management companies have been excluded from the eligible investment institution category, which has been cited as limiting the asset management industry’s incentive to invest in early-stage startups and its ability to supply risk capital.

With the latest changes recognizing Kosdaq Venture Funds and private equity funds specializing in startups and venture companies as eligible investment institutions, investment by asset management companies in early-stage firms and follow-on investment are expected to gain momentum. The industry expects the changes to give asset managers more opportunities to identify promising early-stage companies and support their long-term growth, while increasing the flow of private risk capital into the venture ecosystem and boosting dynamism across the market.

Lee Hwantae, head of the Asset Management Division, said, “We expect that expanding the pool of eligible investment institutions for venture company certification will make it easier for funds managed by asset management companies to invest in early-stage firms.” He added, “We plan to continue building a track record of investment so that proprietary assets managed by financial investment companies and other funds can also be included among eligible investment institutions. Going forward, the association will support the financial investment industry in actively investing in early-stage innovative companies through Kosdaq Venture Funds, private equity funds specializing in startups and venture companies, and other vehicles, and in supporting their growth.”

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