South Korea's Ministry of SMEs and Startups and the Financial Services Commission have announced a comprehensive support plan to combat the impact of the economic downturn on startups.
The plan comes as venture investment and fund formation have been downward since the second half of 2022, with investments falling by 60.3 percent in the first quarter of 2023.
The government will inject more than KRW 10.5 trillion into the domestic venture and startup industry to help companies overcome financial difficulties.
Support measures include increasing funding for startups at various stages of growth, promoting private venture investment, and improving the competitiveness of venture companies.
KRW 6.1 trillion will be provided to early-stage startups, including KRW 1.2 trillion in loans, KRW 0.2 trillion in funds, and KRW 4.7 trillion in R&D.
The Korea Technology Finance Corporation (KIBO) will establish a consignment manufacturing matching platform center and finance production to provide KRW 25 trillion for R&D related to 12 national strategic technologies over five years.
Mid-stage startups will receive KRW 1.9 trillion, including KRW 0.9 trillion in loans and KRW 1 trillion in funds.
The Korea SMEs and Startups Agency, the Korea Technology Finance Corporation(KIBO), and the Korea Credit Guarantee Fund will expand and provide KRW 350 billion in policy financing to support companies facing financial difficulties.
Late-stage startups will receive KRW 0.4 trillion, including KRW 0.3 trillion in funds and KRW 0.1 trillion in loans.
Korea Development Bank will provide KRW 300 billion to support global expansion.
Industrial Bank of Korea will offer a unique KRW 100 billion loan program to support small mergers and acquisitions.
The government will also create a KRW 2.1 trillion fund over three years to expand investment priming and support KONEX-listed companies and companies seeking to go public.
To further support venture investment, the investment limit for bank venture funds will be doubled from 0.5% to 1% of equity.
Korea Startup Forum welcomed these measures but expressed concern about the uneven funding distribution across growth stages and urged the government to increase support for mid and late-stage growth companies.
The Forum also called for an increase in new investment in a fund of funds, which needed to be addressed in the announced measures.
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