The Ministry of SMEs and Startups (Minister Han Sung-sook, hereinafter referred to as the Ministry) held a "Venture Investment Field Communication Meeting" with venture capitalists (VCs) and startup planners (ACs) at the Gwanghwamun Building in Seoul on November 5th. The meeting aimed to ensure fairness in investment contracts and expand corporate participation in investment, and was organized to address recent investment contract disputes.
Recently, controversy has arisen over unfair clauses between investment companies and investee companies in some investment contracts. This has led to continued industry calls for the Ministry of SMEs and Startups and parent funds to proactively promote a fair contract culture. In response, the Ministry shared the progress of its policy implementation and discussed improvement measures to prevent unreasonable clauses while respecting the autonomy of the contracting parties.
The meeting focused on institutional improvements aimed at eradicating unfair practices, particularly those that impose joint liability on startup representatives and other third parties. On October 31st, the Ministry of SMEs and Startups revised the "Regulations on Registration and Management of Startup Planners" and the "Regulations on Registration and Issuance of Investment Confirmation Certificates for Private Investment Partners," prohibiting startup planners and private investment partnerships from incurring joint liability as third parties. This expanded scope, following the 2018 revision to mother funds and the 2023 revision to venture capital firms and partnerships, is expected to alleviate the burden of excessive joint liability and enhance the reliability of investment contracts.
Measures to revitalize corporate venture capital (CVC) were also a key topic of discussion. The Ministry of SMEs and Startups and the CVC Council under the Korea Venture Capital Association reviewed institutional improvements, including easing regulations on external capital contributions by holding company CVCs, permitting the establishment of special purpose companies (SPCs), and allowing general corporations to jointly manage venture capital funds (Co-GPs). While participants expressed hope that the inflow of corporate funds into the venture market would foster startup growth, they also emphasized the need to ensure independence in fund management and prevent conflicts of interest.
Minister Han Seong-sook stated, “For ventures and startups to grow beyond unicorns and into K-Big Techs, sufficient venture capital and patient capital are needed.” She added, “The government will proactively take on risks to ensure that diverse funds can flow into the venture market, and will continue to work to establish a fair investment contract culture.”
He added, "We will reflect the industry opinions presented at this meeting in the 'Venture 4 Powerhouses Leap Forward Plan' currently being established to commemorate the 30th anniversary of venture and the 20th anniversary of the Mother Fund, thereby establishing a blueprint for the next 30 years."
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