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Corporations, venture companies and the Korean government will cooperate to establish a fund that will invest in start-ups and small- and medium-sized companies in advanced industries.
The Small and Medium Business Administration (SMBA) announced Tuesday that it will establish a future creation fund of KRW 600 billion with investment from the private sector, including corporations and venture companies. It will select an operator for the fund and begin investment in mid-September.
The fund is a key initiative for the Korean government’s strategy to create a virtuous cycle and ecosystem to fund venture companies and start-ups.
The Korean government will invest KRW 200 billion and the private sector, including corporations and leading venture companies, will provide the rest.
The investment will focus on advanced industries including information technology, mobile, health care, medical equipment and convergence, but priorities will be given to those private investors prefer.
KRW 200 billion will be invested in companies that were established in the last three years, which the private sector avoided investing in due to high risk.
Leading venture companies, including Neowiz, Daou Technology INC and NHN, will establish a fund exceeding KRW 100 billion to foster new companies.
KRW 400 billion will be invested in companies struggling to grow into large companies.
Doosan, Kolon and other large corporate investors will identify companies with high growth potential and act as mentors for them.
Private investors will be given incentives that offer 3 percent of fund returns.
An SMBA official noted that it is significant that corporations that have been reluctant to invest in venture funds participated, adding that many more corporations are reviewing investing in funds.
To encourage them to invest in venture companies, the Korean government is reviewing a measure that gives additional points for corporations that invest in small-and medium-sized and venture company funds when the National Commission for Corporate Partnership evaluates corporations on its win-win index of the.
SMBA Administrator Han Jung-wha noted that with the introduction of the fund, the administration will endeavor to help corporations and leading venture companies play an important role in investing and fostering start-ups and other venture companies, following an example in the United States.
Source: Yonhap News (Aug. 20, 2013)
** This article was translated from the Korean.