Inaugural Press Conference of the VC Association Chairman
Plans Announced to Revitalize the Exit Market
"Virtuous Cycle Through Expanded Institutional Investment"
Kim Hak-gyun, the newly appointed chairman of the Korea Venture Capital Association (VC Association), emphasized on the 11th the need to create larger-scale KOSDAQ funds than in the past to revitalize the exit market. He plans to devise measures to encourage participation from institutional investors.
Kim Hak-gyun, Chairman of the Korea Venture Capital Association, is speaking at a press conference held on the 11th at the Grand InterContinental Seoul Parnas in Gangnam-gu, Seoul. Photo by Kwon Hyun-ji
At a press conference held at the Grand Intercontinental Seoul Parnas in Gangnam-gu, Seoul, Chairman Kim said, “As the technological hegemony war intensifies and many countries are rushing to foster global innovative companies, Korea should also pay attention to the globalization of KOSDAQ companies,” adding, “Only then can more startups emerge and a virtuous cycle venture investment ecosystem be formed.”
He stated, “There was a case of supplying liquidity to the market by creating a 300 billion KRW ‘KOSDAQ Scale-up Fund’ in 2018, but 300 billion KRW is insufficient now,” and added, “There is a need to create a more advanced fund.” He further emphasized, “The Singapore government announced last month that it would invest about 5 trillion KRW in the stock market, but considering that the market capitalization of the KOSDAQ market is higher, more investment should be made than that.”
He also stressed the need to expand the proportion of institutional investment in the KOSDAQ market. Chairman Kim pointed out, “Unlike the US NASDAQ market where institutional investors account for 80%, individual investors make up 80% of the KOSDAQ market,” and said, “This alienates institutional investors and creates a vicious cycle in the market.” He added, “We will soon prepare and announce measures to increase institutional investment,” and “If consensus is formed, we plan to make policy recommendations such as allowing VCs to invest in KOSDAQ companies.”
Regarding allowing retirement pensions to invest in venture funds, he said, “Retirement pensions themselves aim for stable asset management and have the perception that even if returns are low, as long as there is no risk, it is acceptable, so it will take time to break this fixed mindset,” but added, “We will persuade that venture funds have high returns and are not risky investment targets but rather stable investment targets.” He emphasized, “If that happens, both subscribers and the venture ecosystem can create good synergy.”
Concerning the discovery of new institutional investors (LPs) such as mutual aid associations and pension funds, he said, “I understand that there are quite a few mutual aid associations and pension funds that have not yet promoted VC investment projects,” and promised, “Since funds have been dissolved with good returns, we will strive to recruit more investors by persuading them that they can achieve greater returns within an appropriate risk range.”
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