The Ministry of SMEs and Startups said that, as a follow-up to the "Venture top 4 nations leap comprehensive plan" released last year, revisions to the Enforcement Decree of the Venture Investment Promotion Act and the Enforcement Decree of the Special Act on the Promotion of Venture Businesses passed the Cabinet meeting on the 23rd.
The revisions will take effect July 1 after presidential approval and promulgation. However, some duties delegated to the regional offices of the Ministry of SMEs and Startups will apply starting Jan. 1, 2027.
The revisions focus on increasing the autonomy of the venture investment market and expanding the inflow of private capital. They expand the mandatory investment targets for individual investment partnerships managed by startup accelerators from corporations within three years of operation to startups in their fifth year with no track record of attracting investment. This eases funding burdens for promising corporations with technological strength. The cap on investments in listed corporations by individual investment partnerships was also raised from 10% to 20%.
In addition, when a corporate venture capital (CVC) affiliated with a large business group and an invested corporation later come to belong to the same large business group, a nine-month grace period is granted for the disposal of the invested corporation's equity, improving conditions for investors to recover funds.
The scope of Fintech-based financial services that venture investment companies and others may exceptionally acquire was adjusted from an "industry" standard to a "license, authorization, or registration" standard. This prevents confusion in the field and promotes Fintech investment. The rule requiring 20% mandatory investment in startup and venture corporations at the individual venture investment partnership level was also abolished, and the rule was revised so that only the management company's total fund aggregates standard (40%) applies, enabling flexible strategies tailored to each fund.
Rules for managing the mother fund and the venture investment system were also revised. When extending the duration of the mother fund, new procedures and grounds were established to allocate and pay investment principal and revenue to members wishing to withdraw. This increases trust and transparency in the operation of the mother fund.
A management system was also overhauled to meet the surging demand for inspections of venture investment companies and venture investment partnerships. Starting in 2027, dissolution, liquidation, and regular inspections will be carried out by the regional offices of the Ministry of SMEs and Startups, and statistics duties for startup accelerators will be transferred from the Korea Institute of Startup and Entrepreneurship Development (KISED) to the Korea Startup Accelerators and Early Stage Investors Association (K-AIA), strengthening the expertise of statistics on investments in early-stage startups.
Minister Han Seong-sook of the Ministry of SMEs and Startups (MSS) said, "This revision of the enforcement decrees is the result of improving regulations so the venture investment market can operate more autonomously and flexibly," adding, "We will continue to work to ensure the revamped system takes hold successfully at the investment front so that private capital can flow actively into ventures and startups."