The Financial Services Commission and the Ministry of SMEs and Startups signed a memorandum of understanding (MOU) on promoting a transition to productive finance, expanding venture investments, and enhancing cooperation for the ‘Startup for All’ project with five financial holding groups and related industry organizations on April 30.
The MOU will facilitate the provision of funding support by five financial holding groups for the startup and venture investment ecosystem, accelerating the transition to productive finance and helping to create conditions where anyone with an innovative business idea can make an attempt to launch a startup.
The MOU signing ceremony was held with participation by Minister Han Seong-sook of the Ministry of SMEs and Startups, Chairman Lee Eog-weon of the Financial Services Commission, the CEOs of five financial holding groups and the heads of related industry organizations.
The following are key details of the MOU.
First, to help promote venture investments in the private sector, the five financial holding groups will create a venture fund worth KRW800 billion in total until 2029, starting with an input of KRW400 billion this year. In particular, Hana Financial Group will provide a leading role as it pledged to provide a total of KRW400 billion (KRW100 billion every year) to lead the venture investment effort. In this regard, the government plans to provide incentives (e.g. extra tax exemption) to promote participation from the private sector.
In addition, the five financial holding groups will work to strengthen investment and cooperation with policy-based funds. The five financial holding groups will make joint contributions together with policy-based funds to create a growth fund (LP) in the amount of KRW100 billion and a regional growth fund in the amount of KRW20 billion to facilitate the supply of venture capital in the startup ecosystem.
The five financial holding groups will also provide relevant support through their overseas offices and global business networks to assist invested companies to scale up and grow into unicorn companies.
Second, the five financial holding groups will jointly participate in the ‘Startup for All’ project initiated by the MSS. The five financial holding groups will invest KRW20 billion in the project, and based on their investment, the Korea Technology Finance Corporation will newly introduce a technology guarantee program in the size of KRW150 billion. To ease the burden of early setup cost for prospective startup entrepreneurs, their guarantee fees will be waived entirely and the guarantee rate will be raised to 100 percent from 85 percent previously.
Participation by the five financial holding groups will help to expand the availability of financial expert mentorship and accelerator support programs. It will also help to boost advertisement through the mobile application of major banks to promote public participation in the ‘Startup for All’ project.
Third, the MSS and the FSC will closely work together to promote venture investments and the startup ecosystem and accelerate transitions to productive finance. To this end, the MSS and the FSC will work to establish efficient cooperation channels for operating policy-based funds, formulating and providing industry support programs, and seeking out innovative and promising companies. In addition, the MSS and the FSC plan to strengthen policy-based cooperation to promote the growth of regional economies and regional enterprises.
At the MOU signing ceremony, SMEs and Startups Minister Han seong-sook and FSC Chairman Lee Eog-weon both spoke about the significance of today’s MOU signing as providing a critical turning point for the government’s ‘Startup for All’ project and productive finance initiatives and helping to promote the startup and venture investment ecosystem.
* Please refer to the attached PDF for details.