Korea Development Bank Eases Follow-up Investment Procedures to Promote Venture Investment

Discussion on Support Measures for Investment Activation through Consortium of Funding Institutions including Korea Venture Investment and Korea Growth Finance

[Asia Economy Reporter Kangwook Cho] On the 30th, the Korea Development Bank announced that it will ease the follow-on investment approval process through a limited partner (LP) consultative body jointly with Korea Venture Investment Corp. and Korea Growth Investment Corp.

Follow-on investment refers to the additional venture capital supplied according to the growth stage of a company after the initial investment, which is necessary for the scale-up of venture companies. However, until now, when a fund manager made a follow-on investment through another fund, a cumbersome procedure requiring a special resolution (approval by two-thirds or more of the partners) was necessary.

With this measure, if there are no conflicts of interest such as the expiration of the investment period of the prior investment fund or exhaustion of investment resources, follow-on investments will be possible for all funds managed by the fund manager with only prior reporting without a general meeting of partners, significantly reducing the workload of fund managers.

Also, due to the enforcement of the Venture Investment Act, revisions to compliance monitoring reports submitted to investors at the time of investment execution are necessary, and the policy investors have agreed to apply a revised form jointly.

The industry expects that through cooperation among representative limited partners in the venture investment market, the unification of duplicated tasks and the provision of standard forms will positively contribute to improving the operational efficiency of fund managers.

The three institutions stated, "We will continue to actively identify and resolve difficulties faced by entrusted fund managers through the consultative body, strengthen cooperation to increase work efficiency, and do our best to ensure smooth supply of venture capital to venture companies in the post-COVID-19 era."