Gyeonggi-do Introduces 'Crowd Funding' to Boost Startup Investment

Selection of 50 Companies Including 'Securities Type (Investment Type)' and 'Sponsorship Type (Reward Type)'

[Asia Economy Reporter La Young-cheol] Gyeonggi Province will promote the 'Crowd Funding-Linked Startup Support Project' starting this year to help early-stage startups with creative items secure private investment funds.

According to the province on the 29th, this project, which aims to facilitate market entry and private-led startup activation by adopting the 'Crowd Funding' method of raising funds from an unspecified number of small investors, is being implemented for the first time in Gyeonggi Province during the 7th local government administration.

When startups register their products on an online funding platform, they evaluate marketability through the selection and feedback of small investors from the public, and then expand their equity capital through investment attraction.

The project targets technology-based startups within 7 years in the province, selecting a total of 50 companies: 30 'securities-type (investment-type)' companies that give equity shares to investors as funding returns, and 20 'reward-type' companies that provide products or other rewards.

The 50 selected startups will receive support for intermediary fees for registering on the crowd funding platform, as well as costs for video and funding page production, advertising fees, etc., up to 5 million KRW for 'reward-type' and up to 10 million KRW for 'securities-type'.

To enhance investment attraction capabilities and increase funding success rates, investment education and 1:1 consulting and mentoring support will also be provided.

In particular, among the 30 'securities-type' companies, 15 with excellent funding performance will be selected and provided with differentiated commercialization funds up to 50 million KRW to promote continuous business stability.

The province expects this project to serve as an opportunity for stable funding and the activation of a private-centered startup investment culture, considering that many domestic startups rely on loans for startup capital, which can lead to credit delinquency or difficulties in re-startup due to stigma if they fail.

A provincial official stated, "In the COVID-19 situation, there is an advantage in promoting their items online and securing funds and potential customers," adding, "We will operate the project solidly to provide a stepping stone for promising startups with high potential to succeed in their ventures."