The Financial Services Commission for South Korea has announced changes to increase venture capital fund creation and investment in the country to help SMEs and startups.
The government of South Korea has announced that it will ease regulations on venture capital funds to allow private investors to create funds without a joint investment by the government.
The change in regulations will also reduce the regulations surrounding funds invested in high-potential startups and small and medium-sized enterprises.
The changes were announced by the Financial Services Commission as a way of increasing investment in SMEs and startups in the country. Currently investment in these businesses is only possible with a government co-investment in the funds.
The Financial Services Commission will apply these changes to merger and acquisitions of startups and SMEs by larger companies too, in a hope to bolster the country’s merger and acquisitions market that only saw 2.1% of funds make money in 2014.
Previous to these changes there were tax benefits established by the government to investing in startups and SMEs, however the resulting regulations surrounding this needed for compliance potentially deterred investors.
In 2014 only 82 venture capital funds for SMEs and startups were created. Although this number is up from 41 in 2012.