Fund boosts IT start-ups

To jibe with the Park Geun-hye government’s creative economy initiative, the nation’s financial watchdog plans to raise a 100 billion won ($89.8 million) fund specializing in intellectual properties to increase IT start-ups’ access to finance.

The Financial Services Commission announced yesterday its plan to create the exclusive fund for producers of intellectual properties, which will provide preferential loan guarantees for businesses based on an evaluation of their assets.

For IT start-ups, there have been some funds that provide loans based on the value of technologies, but the new fund will weigh the values of intellectual property that has long been considered insignificant compared to manufactured goods, even though Korea is one of the world’s IT powerhouses.

The FSC said domestic financial institutions are in the early stages of intellectual property evaluation and are unable to help finance start-ups. The government has been issuing loans to those companies, despite their financial weaknesses, which has led to significant numbers of start-ups going bankrupt after a few years of operation.

“Creativity, the core of intellectual properties, should be protected by law, since those properties are an essential growth engine for a creative economy,” said an FSC official. “We need an investment-based environment where intellectual properties are fairly evaluated and receive adequate rewards.”

The FSC proposed a new term dubbed “intellectual property finance,” referring to investments, loans and guarantees for such businesses.

The financial authority will also introduce an insurance program to ensure that those businesses receive stable profits from royalties.

Even though borrowers of intellectual property may be financially incapable of paying royalties, the insurance will reimburse intellectual property owners, helping them to earn profits.

The FSC will come up with a detailed plan in October, including establishment of an evaluation system that allows financial institutions to accurately measure values of intellectual properties.

BY SONG SU-HYUN [ssh@joongang.co.kr]