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Thursday, November 30, 2023

Korean gov’t announces new $1.5B won investment fund for startups

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President Yoon Suk Yeol speaks at a startup forum in Cheongwadae in central Seoul on Wednesday. [YONHAP]
President Yoon Suk Yeol speaks at a startup forum in Cheongwadae in central Seoul on Wednesday. [YONHAP]

The Korean government created a 2 trillion won ($1.5 billion) investment fund to support startups, including startups with a focus on overseas expansion. Local startups founded by foreign entrepreneurs are also among the fund’s main recipients.

Dubbed “Startup Korea fund,” the 2 trillion won will be invested in three startup sectors by 2027: so-called deep tech, referring to startups whose business model is based on high technology in engineering, or significant scientific advances; promoting startups’ global expansion and creating a fund of funds, a pooled fund that invests in other funds through private fund managers.

“The government will become the firm foundation so that youths worldwide who lead revolutions can gather in Korea and unite with other global leaders to freely challenge themselves [in new businesses],” President Yoon Suk Yeol said at the Startup Korea Forum at which 110 startup CEOs and related insiders were gathered in Jung District, central Seoul, on Wednesday.

If certain conditions are met, the fund will lend financial support to startups aiming for the global market. The conditions are that the company’s headquarters are within Korea and wants to create another subsidiary overseas, or if the company’s headquarters are situated overseas, they need to contribute to the growth of the domestic economy such as through building research and development centers or production plants in Korea.

The Ministry of SMEs and Startups also announced that it will review easing visa qualifications to make it easier for foreigners to start businesses in Korea. The majority of fledgling foreign business owners apply for an E-7 visa, a category reserved for skilled professionals.

The term and scope of activities for the D-2 international student visa will also be relaxed, enabling students to have the opportunity to intern in local startups. Currently, D-2 visa holders can only work part-time jobs or as student researchers in the technology realm.

Specific criteria for D-8 startup visas will be created for the government to consider multiple factors other than the company’s revenue to give foreign entrepreneurs more opportunities to attain permits.

“However, we are at the beginning of the discussion for relaxing terms for visas because the matters also have to be adjusted with the Ministry of Justice,” according to a spokesperson from the Ministry of SMEs and Startups. “A date as to when the visa terms will be eased has yet to be set.”

The government aims to support the growth of up-and-coming startups by listing at least five Korean companies in the top 100 unicorns worldwide; increasing the amount of venture capital investments to 14.2 trillion won; attracting 500 billion won investment from corporate venture capital and placing third in the Global Entrepreneurship Index (GEI) by 2027.

The GEI, organized by the Global Entrepreneurship and Development Institute, annually measures the health of entrepreneurship ecosystems in 137 countries.

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]