Ministry of SMEs and Startups Signs Agreement with Financial Supervisory Service to Promote Venture Capital Ecosystem and Mutually Beneficial Finance

Strengthening Communication Between Financial Markets and SMEs/Venture Businesses
Discussing Measures to Address Challenges
Identifying and Implementing Various Collaborative Initiatives

The Ministry of SMEs and Startups announced on the 28th that it has signed a Financial Business Agreement with the Financial Supervisory Service to promote the venture capital ecosystem and foster mutually beneficial finance.

The Ministry of SMEs and Startups and the Financial Supervisory Service decided to enter into this agreement to actively serve as a bridge between the financial market and innovative small and venture businesses. With the recent emphasis on productive finance, the financial industry as a whole has been announcing plans to expand the supply of venture capital. Accordingly, both organizations determined that close communication between the financial market and small and venture businesses is necessary to ensure the efficient provision of venture capital.

Through this agreement, the consultative body composed of the Ministry of SMEs and Startups, the Financial Supervisory Service, and related organizations will discuss measures to improve prudential regulations-such as risk weightings-that restrict venture investment by financial institutions, as well as ways to address financial challenges faced by small and venture businesses. They will also identify and pursue various collaborative initiatives to ensure that diverse funds, including pension funds and retirement pensions, can achieve stable returns through venture investment.

To gain a comprehensive view of the entire venture investment market, the parties will enhance statistical analysis and strengthen cooperation in the management and supervision of venture capital to better protect investors and investee companies. In addition, to ensure that venture capital is supplied in line with its intended purpose, information such as technology evaluation data held by the Korea Technology Finance Corporation and information on promising companies possessed by the venture investment sector will be shared with the financial industry, thereby encouraging a seamless relay of investment and financing to promising small and venture businesses.

In order to promote the mutual growth of financial institutions and small businesses, the two organizations will also begin full-scale collaboration to establish the win-win finance index in the market and to activate co-prosperity loans, thereby further spreading mutually beneficial finance.

Han Sung-sook, Minister of SMEs and Startups, stated, "The challenge and innovation of K-Venture and startups are the best growth engines to overcome complex crises. It is crucial to provide sufficient growth capital so they can become unicorns and decacorns leading the era of AI and deep tech." She added, "Starting with today's agreement, both organizations will pursue various collaborative initiatives to help Korea become one of the world's top four venture powerhouses and to create an annual venture investment market worth 40 trillion won to support this goal."

Lee Chanjin, Governor of the Financial Supervisory Service, commented, "The success of venture capital policy hinges on building a system where funds can be provided and recovered in a timely manner at each stage of a company's growth." He continued, "As we push for a major shift in capital flows toward productive sectors through instruments such as Business Development Companies (BDC), Integrated Investment Accounts (IMA), and promissory notes, we will ensure that venture capital is properly managed and supervised in line with its intended purpose."