[Asia Economy Reporter Kwangho Lee] The Financial Services Commission plans to establish an Innovation Growth Fund worth 15 trillion won over the next five years to support small and venture businesses. Additionally, a 6.3 trillion won program will be introduced through policy financial institutions such as the Korea Development Bank and Industrial Bank of Korea to provide loans to startup and venture companies that lack collateral or have low credit ratings.
On the 24th, Financial Services Commission Chairman Kim Joo-hyun visited Front One in Mapo, Seoul, and held a meeting with venture entrepreneurs, the venture investment industry, and the financial sector to announce these support measures.
Chairman Kim stated, "We will establish an Innovation Growth Fund totaling 15 trillion won over five years to support small and venture companies in new industries such as semiconductors and artificial intelligence (AI), and provide the necessary funds for venture companies to grow into unicorn companies."
The Innovation Growth Fund will invest 3 trillion won annually (with a 10% government contribution) in innovative industries and growth support sectors by injecting 300 billion won of public funds each year. Policy financial institutions will introduce a 6.03 trillion won program that supplies funds to venture companies through growth-oriented evaluations.
In particular, the Industrial Bank of Korea will introduce a Silicon Valley Bank-style venture loan that offers low interest rates through a loan structure combined with convertible bonds (bonds with rights to purchase new shares). For venture companies, this allows them to use loans at interest rates lower than market rates during the period when funds are insufficient between initial investment attraction and follow-up investments.
The Industrial Bank of Korea plans to provide loan support even if collateral is insufficient or credit ratings are somewhat low, based on evaluations focused on technological capability and growth potential. Furthermore, it announced support for private capital raising through the capital market by introducing a new venture capital vehicle called the Corporate Growth Collective Investment Scheme (a fund that mainly invests in promising unlisted companies and enhances liquidity through listing) and rationalizing public offering regulations.
It also plans to support the listing of innovative companies by enhancing the technology special listing evaluation through a standard evaluation model reflecting the characteristics of each industry.
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