The battered Korean startup community is slated to get a big boost from a government-backed venture fund totaling $820 million to be established this year. The Korean government will chip in just under half of the fund, with the remainder expected to come from private venture capital firms and other investors.
The money will be given to startups in new materials, biotechnology and environmental technology, says Han Joon-ho, chairman of the Presidential Committee on Small and Medium Business.
About 5,000 startups with promising technology in the targeted industries, will receive the loans through 2005, Han says. The selected companies will be entitled to loans from eight banks, including Korea Development Bank, based on support provided by the Korea Technology Credit Guarantee Fund.
To make sure the fund’s investments yield a return, the Korean government is dispatching “overseas market experts” to 50 countries. The goal is to expand the number of venture-backed startups exporting products from Korea to 800 this year, and to expand the share of Korean exports by small and medium-sized firms to 50% by 2010, Han says.
But for all that, Korea has been hit very hard economically and has been looking for some recipe to bring it out of its financial slump. As in the United States, Korean VC firms are having more than their fair share of trouble raising new funds. Since 2001, more than 10 of the nation’s 150 VC firms have gone bust, according to the Korean Venture Capital Association. More are sure to follow.
To make matters more difficult, the venture industry has been involved in a series of scandals leading all the way to Korean President Kim Dae-Jung’s sons.
The presidential committee will make sure that the venture companies that receive investment funds are not involved in irregularities, Han says.
Contact Michael Copeland