Gov’t begins 10 trillion won fund for start-ups

The government plans to launch a 2.6 trillion won ($2.45 billion) investment fund for start-ups this year, the first portion of a proposed 10 trillion won fund to be created by 2020, the Ministry of Strategy and Finance said Wednesday.

Earlier, the government said it would allocate a total of 30 trillion won over the next three years to foster innovative start-ups, create a virtuous business cycle and secure new growth drivers.

Under the comprehensive plan, the government will focus on expanding money supply for fledgling enterprises and creating a venture-friendly environment.

For the investment fund, the government will chip in 3.7 trillion won over the next three years, with the remaining 6.3 trillion won to be financed by the private sector.

The state’s portion will include 1.8 trillion from the Korea Development Bank and affiliate KDB Capital.

The government estimates that once the money goes to start-ups, the investment compared to the country’s gross domestic product will increase from 0.13 percent in 2015 to 0.23 percent between 2020 and 2022.

As of 2015, start-up investment in the United States compared to GDP was 0.3 percent. In China, it was 0.24 percent.

A 20 trillion won loan program funded by state lenders like the Korea Credit Guarantee Fund and Korea Technology Finance Corporation will also be available for start-ups. The government hopes the loans will be used for facilities investment, research and development and mergers and acquisitions.

In addition, the government plans to reduce taxes on profit gained from stock options in start-ups in order to attract talented people to the sector.

And to help start-ups raise funds more easily through stock sales, the government plans to boost the Kosdaq and Konex markets.

BY LEE HO-JEONG, YONHAP [lee.hojeong@joongang.co.kr]