This article was posted on the ChosunBiz MoneyMove (MM) site at 5:45 p.m. on March 25, 2026.
Venture capital firms (VCs) that discover and invest in promising ventures and startups are shunning Business Development Companies (BDC), a listed public fund that invests in venture and innovation corporations, drawing attention to the reasons behind this. Although the Financial Investment Services and Capital Markets Act was amended last year to introduce BDCs and the law came into full effect this year, no VCs planning to operate them have been identified.
According to the VC industry and others on the 25th, the Financial Services Commission last month proposed BDC operation to large domestic VCs with assets under management of 1 trillion won or more, but none showed interest.
A VC industry official said, "Many large VCs, including Korea Investment Partners, Atinum Investment, IMM Investment, SV Investment, Intervest, and DSC Investment, already examined BDC operation last year and then stopped," adding, "The common opinion is that it does not make money but is difficult to manage."
BDC is called a public fund that supplies venture capital to unlisted venture and innovation corporations. Discussions began in 2018 as part of measures to activate investment in innovative companies, and buoyed by the government's trend to expand the venture investment market, the amendment to the Financial Investment Services and Capital Markets Act passed the National Assembly at the end of August and was put into full effect from the 17th of this month.
Initially, the market expected VCs to continue participating in BDC operation. There was spreading anticipation that it could be an alternative to expand assets under management by drawing private idle funds into public funds. Given that more than half of a fund's assets must be invested in venture and innovation corporations, VCs were also seen as having operational competitiveness.
As a result, VC (venture capital companies and new technology finance companies) along with asset management companies ranked first among operators in the amendment to the Financial Investment Services and Capital Markets Act, which provides the legal basis for introducing BDCs. The structure lists funds that prohibit redemptions for five years or more and are listed on the Korea Exchange (KRX), and securities companies were excluded due to concerns over conflicts of interest between proprietary accounts and client assets.
Analysts say operational burdens led to VCs' avoidance. Because BDCs are public listed structures, separate organizations for valuation, disclosure, investor relations and compliance are required on an ongoing basis. VCs operate private funds dealing with a small number of investors and lack the human and organizational foundation to handle the public fund operation system.
The Financial Services Commission even offered carrots such as easing regulations on securities collective investment business professional personnel to encourage VC entry, but it failed to gain traction. Specifically, the FSC requires four securities operation professionals for BDC operation, but it lowered the securities operation professional requirement to two for VCs.
Another VC industry official said, "Even if the VC entry exception is applied, the core of BDC is that it is a listed public fund in which individual investors participate," adding, "Quarterly fair value assessments of fund assets and the disclosure obligation for major management matters of principal investee companies are actually the parts VCs most want to hide."
The fact that management fees are not large is also cited as a reason VCs shy away from operating BDCs. Because BDCs are listed on an exchange and operated in a structure similar to exchange-traded funds (ETFs), total fees (management fees and other operating expenses) are expected to fall below 1%. Venture fund management fees are typically set around 2%.
There are even concerns that BDCs may fail to attract interest. With VCs avoiding them, asset management companies are also hesitant to participate, citing operational burdens. The Financial Services Commission granted BDC operation licenses to all 42 comprehensive management companies when the law took effect this month, but only a few large firms are reportedly preparing product launches.
The Financial Services Commission appears to be hastily urging financial group-affiliated VCs to participate in BDC operation. It reportedly separately called financial-affiliated VCs such as Mirae Asset Venture Investment, KB Investment, and Woori Venture Partners to re-explain entry exception matters and request support for early activation of the BDC system.
A securities industry official said, "The Korea Exchange plans to complete system maintenance by next month, but BDC products are not expected to be numerous," adding, "If BDCs are operated mainly by asset management companies without VCs that have expertise in unlisted investments, it will be difficult to find differentiation from existing KOSDAQ public funds."
☞BDC
It stands for Business Development Company, a listed public fund that allows individual investors to indirectly invest small amounts in unlisted venture and innovation corporations. It can be traded on the market like buying stocks. It was introduced domestically in March.