“KOSDAQ Venture Fund investments to count toward venture company certification”

[Financial News] The system will be revised so that investments made by KOSDAQ Venture Funds and private equity funds specializing in startups and venture companies can count toward venture company certification requirements. Until now, these funds were not recognized as eligible investment institutions for venture company certification, limiting the expansion of investment in early-stage companies. The changes are expected to broaden the foundation for supplying private risk capital by encouraging asset managers to invest in venture companies at both the early and follow-on stages.
On the 26th, the Korea Financial Investment Association said the Ministry of SMEs and Startups had included KOSDAQ Venture Funds and private equity funds specializing in startups and venture companies among the eligible investment institutions for venture company certification in its startup regulatory rationalization plan, announced at the second plenary meeting of the Regulatory Rationalization Committee on the 23rd.
Under the current venture company certification system, a company must secure at least 50 million won in investment from an eligible investment institution to qualify under the venture investment category. The investment must also amount to at least 10% of the company’s capital.
Previously, however, KOSDAQ Venture Funds and private equity funds specializing in startups and venture companies were not included among eligible investment institutions. As a result, even companies that secured investment from these funds had difficulty meeting the certification requirements for the venture investment category based solely on that investment.
With the system revision, investments from these funds are expected to count toward venture company certification requirements, expanding opportunities for companies that receive investment to obtain certification. Asset managers are also expected to have a greater incentive to invest in early-stage companies.
The financial investment industry expects asset managers to step up not only their early-stage investments but also follow-on investments (follow-on) tailored to companies’ stages of growth. This is because the changes will broaden the basis for establishing investment relationships with promising companies from an early stage and providing them with funding throughout their growth. This is expected to bring more private risk capital into the venture investment market.
The Korea Financial Investment Association has proposed relevant measures to the Ministry of SMEs and Startups and the Public-Private Joint Regulatory Rationalization Task Force, and has held consultations with them to advance these changes.
Lee Hwan-tae, head of the Asset Management Division at the Korea Financial Investment Association, said, “Expanding the pool of eligible investment institutions for venture company certification is expected to make it much easier for funds managed by asset managers to invest in early-stage companies.”
He added, “We plan to continue building an investment track record so that proprietary assets managed by financial investment companies and other funds can also be included among eligible investment institutions,” and stressed, “We will support the financial investment industry in actively investing in early-stage innovative companies through KOSDAQ Venture Funds and private equity funds specializing in startups and venture companies, and in supporting their growth.”
[email protected] Kim Hyun-jung Reporter