[Asia Economy Reporter Moon Hyewon] On the 9th, the Ministry of SMEs and Startups announced that it will establish a step-by-step strategy and significantly increase support to foster unicorn companies (unlisted companies with a corporate value of over 1 trillion KRW).
This support focuses on creating domestic unicorn companies with domestic capital.
The unicorn fostering process is divided into three stages: Baby Unicorn, Prospective Unicorn, and K-Unicorn.
First, for Baby Unicorns with a corporate value under 100 billion KRW, up to 15.9 billion KRW in funding will be provided if selected for the Baby Unicorn 200 fostering project.
Additionally, 250 startups in the BIG3 (system semiconductors, bio-health, future automobiles) and DNA (data, 5G networks, artificial intelligence) sectors will be discovered by 2022 to support technology development, investment, and guarantees. Small but strong companies in materials, parts, and equipment will also be additionally selected this year and receive up to 18.2 billion KRW in funding over five years.
Companies that have gone through the TIPS program, where private and government sectors jointly nurture technology startups, will also be fostered into prospective unicorns through commercialization support.
The Ministry plans to increase the number of prospective unicorns to over 500 by 2022 through the Baby Unicorn fostering project.
The second stage focuses on scaling up prospective unicorns.
A 'Jump-up Fund' worth 1 trillion KRW will be created and invested to support the follow-up leap stage of prospective unicorns, and separately, a 'K-Unicorn Matching Fund' will be established where the Korea Fund of Funds matches investments up to 20 billion KRW at the unicorn registration stage.
Special guarantee programs to cover temporary funding gaps will also be expanded.
A new 'Investment-Guarantee Leverage Program,' where the Korea Technology Finance Corporation provides matching guarantees when receiving investments, will be introduced, and the 'Prospective Unicorn Special Guarantee,' piloted last year, will be operated as a regular program.
Institutional improvements will also be pursued, such as revising the Special Act on Venture Businesses to allow issuance of differential voting rights shares for unlisted venture companies.
Furthermore, the K-Unicorn Supporters activities will expand participation from financial sectors such as banks beyond venture capital, and a delegation for attracting overseas investment will be operated.
The Ministry stated it will strive to advance the target date for achieving 20 unicorn companies from 2022 to 2021.
Minister Park said, "Considering recent cases where over 120 countries worldwide requested domestic startups to supply diagnostic kits, the COVID-19 crisis can become a new opportunity for Korean companies," adding, "Through the K-Unicorn Project, we will make Korea one of the top four venture powerhouses."
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