The Ministry of SMEs and Startups (MSS) and the Financial Supervisory Service said on the 28th that they signed a "business agreement to vitalize the venture capital ecosystem and coexistence finance" at the Financial Supervisory Service headquarters in Yeouido, Seoul.
Venture capital refers to funds invested in early-stage venture companies or technology businesses with high growth potential.
The Ministry of SMEs and Startups (MSS) and the Financial Supervisory Service (FSS) plan to strengthen interagency cooperation by signing a business agreement to perform the role of consolidation between the financial market and innovative small and medium-sized enterprises and venture companies. First, they plan to discuss prudential regulations, such as risk weights, that restrict venture investment by the financial sector, and measures to improve financing difficulties for small and medium-sized enterprises and venture companies.
They will also pursue various cooperative tasks, such as seeking ways for funds such as pension funds and retirement pensions to earn stable revenue through venture investment. They agreed to strengthen cooperation in the management and supervision of venture capital to bolster protection for investors and investee corporations.
To ensure venture capital is supplied as intended, they will share with the financial sector the technology evaluation information held by the Korea Technology Finance Corporation (KOTEC) and promising corporation information held by the venture investment industry, thereby guiding a relay of investment and loan to promising small and medium-sized enterprises and venture companies.
Lastly, they will promote joint growth between financial companies and small and medium-sized enterprises. They plan to introduce next year a "coexistence finance index," an indicator that evaluates and quantifies the role of the financial sector (banks) in coexistence finance for small and medium-sized enterprises, and to establish it in the market. In addition, they will collaborate to vitalize co-growth loans.
Minister Han Seong-sook of the Ministry of SMEs and Startups (MSS) said, "The challenges and innovations of K-venture and Start - Up are the best growth engine to break through the complex crisis, and it is important to sufficiently back them with growth capital so they can leap into unicorns and decacorns leading the era of artificial intelligence (AI) and deep tech."
She added, "Starting with today's business agreement, the two agencies will push ahead with a variety of cooperative tasks to help Korea rise to become one of the global top four venture powers and to create a 40 trillion won annual venture investment market that supports it."
Financial Supervisory Service (FSS) Governor Lee Chan-jin said, "The success or failure of venture capital policy depends on building a system in which funds can be supplied and recovered in a timely manner at each stage of a corporation's growth," and explained, "We will establish a framework that supports venture capital and coexistence finance in the right place at the right time, in response to the call for a shift to a dynamic K-venture and for joint growth between small and medium-sized enterprises and the financial sector."