FSC to expand venture capital support

The nation’s top financial regulator plans to expand the exemption of guarantee requirements for start-ups to support fledgling firms.

The Financial Services Commission is considering whether to ease regulations on investment limits to revitalize the KONEX market that opened in 2013 to facilitate financing for start-ups and small companies.

The K-OTC, which deals with the trading of non-listed shares, will also open a second market in March for the trading of small venture firms’ stocks.

The FSC reported these policies to President Park Geun-hye on Thursday, hoping they will stimulate the financial ecosystem for start-ups, one of the major pillars of the government’s “creative economy” drive.

“The government will fuel the creative economy by expanding the scope of exemption from collective liability and easing guarantee requirements for start-ups,” an FSC official said.

Under the plan, the guarantee exemption will be expanded from start-ups that are less than three years old to start-ups of any age.

The FSC will remove the guarantee requirements for entrepreneurs with excellent credit ratings, starting March. Companies with an “AA” credit grade or and higher will be automatically given the guarantee waiver.

The government will provide a total of 1.5 trillion won over the next five years to support entrepreneurs whose start-ups have failed.

In addition, the FSC said it would create tech investment funds worth about 300 billion won ($276 million), as part of its “FinTech 3.0” project to expand the country’s financial services technology industry.

“To strengthen the basic framework for FinTech, we will give larger entitlements to technology credit bureaus,” the FSC stated, adding that it was planning to bring together dispersed tech networks under these bureaus.

The regulator also announced that it would foster special brokerages that focus on mergers and acquisitions of the small and medium-sized enterprises.

“The state project aims at fostering brokerages that specialize in M&As of SMEs, based on their achievement in the SME M&A portfolios, the number of experts in SME deals and potential strategies.”

The FSC plans to address more detailed plans to support these SME-targeting brokerages in the first half.

“These brokerages will be strongly encouraged not only to pioneer the SME and venture M&A markets, but also provide information sessions to related companies,” the FSC said.

By Chung Joo-won (joowonc@heraldcorp.com)