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A New Era of Innovation Begins

Policymakers’ desire to foster local venture ecosystem goes hand in hand with their initiatives on encouraging entrepreneurship. Recently, Korea Magazine’s cover story reveals a significant change based on Korea government to develop the nation’s “Creative Economy”. According to the magazine, “the creative economy initiative, as the plan called, aims to revolutionize the Korean economy by fusing information and communication technologies to not only create new business and opportunities, but also to innovate existing, traditional industries.”

In order to create a “virtuous cycle for investment funds”, Korean government offers several incentives,

1. To create a first-rate ecosystem for venture companies to match its IT infrastructure.

1. To create a first-rate ecosystem for venture companies to match its IT infrastructure.

The government is taking measures to ease the joint surety system–which imputes the obligation to repay debts to other parties such as family members, relatives or employees when the principal borrower defaults — for promising entrepreneurs, with the aim of making a transition from the collateral, security-based financial environment to one based on investment and financing through building a technology evaluation system for startups.

2. The government is increasing the pool of angel investors, wealthy individuals who provide capital for startup businesses, often in return for equity.

2. The government is increasing the pool of angel investors, wealthy individuals who provide capital for startup businesses, often in return for equity.

The government will also increase tax deductions for angel investments. In the next three years, it will also provide angel investors with notable investment records which give them priority in policy funding.

In parallel, government’s customizing funding plan for startups, utilize global companies’ market know-how, networks and platforms to support the entire process of startup training, technology development, business model development and providing consulting and funds. Korean government evens strives Korean youth’s entrepreneurial spirit with its “biz-cool program” as well as “venture for Korea” program for talented youth to do intern at promising venture companies.

Korean policymaker points that they have taken Israeli’s Yozma Fund as their example. Funded by the Israeli government in 1993, Yozma Fund showed that the role of the government in activating startup investment has been very important. Therefore, Korean Strategy and Finance Minister Hyun Oh-seok said,

In order to achieve a dynamic, innovative economy, we need to create an environment where startup and venture companies can grow into small and medium-sized firms and ultimately global corporations.

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