FSC unveils funding plan to nurture new ventures

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FSC unveils funding plan to nurture new ventures

The Financial Services Commission said yesterday it will create a 6 trillion won ($5.4 billion) Growth Ladder Fund from public and private sources to support venture firms that want to start new businesses.

The plan is part of a broader policy under the Park Geun-hye government to invest in small businesses firms so they can become contributors to the overall economy and create jobs.

“We plan to operate the Growth Ladder Fund to create favorable conditions for venture firms and boost [the number of] start-ups,” said FSC Chairman Shin Je-yoon yesterday.

According to the plan, the fund will be established over three years starting from the third quarter of this year.

Of the 6 trillion won, 1.5 trillion will be invested by government-operated Korea Development Bank, Industrial Bank of Korea and Korea Finance Corporation, while 350 billion won will be distributed by the Banks Foundation for Young Entrepreneurs.

In the first year, a total of 2 trillion won will be managed.

According to the Korea Institute of Finance, 2 trillion won injected into the venture industry would generate 5.5 trillion won worth of production and 27,000 jobs.

Creation of the fund is in line with the Park administration’s push to provide an environment where venture companies can promote their businesses without worrying about failing.

The administration has emphasized the need for individuals to be able to start and grow businesses and, if they fail, try again.

Park has promoted a “creative economy” where technology entrepreneurs have access to favorable financing.

However, of the 466 trillion won in capital secured by SMEs as of the end of last year, 99 percent or 461.4 trillion won was through loans.

“Local start-ups and venture firms are not able to grow because funding isn’t being supplied smoothly,” said FSC Vice Chairman Chung Chan-woo. “The fund will make up for that shortfall.”

The FSC plans to assemble a task force this month consisting of officials from policy financial institutions and the Banks Foundation that are investing in the fund and in June announce in detail how the fund will be managed.

With many conventional industries like automobiles and steel facing fierce competition with rival countries - Japan and China, in particular - market experts have been stressing the need for Korea to find a new way to boost the economy.

By Lee Eun-joo [angie@joongang.co.kr]
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