The Korea Accelerator Association (KAIA) , a non-profit organization, announced on the 9th that it has officially published a standard contract for convertible preferred stock (CPS) subscription agreements and conditional equity subscription agreements (SAFE) optimized for the early-stage investment environment in Korea, as well as guidelines for utilizing venture studios, in collaboration with law firm DLG.
This document was created to reflect the practical environments of startup planners and early-stage investors, breaking away from the traditional venture capital-centric investment contract practices. The association explained that it focused on increasing transparency across the early-stage investment market by minimizing complex legal risks and presenting a predictable contract structure.
The association has developed detailed guidelines, along with the CPS and SAFE standard forms, reflecting feedback from the field that existing investment agreements do not adequately reflect the growth stages and financial uniqueness of early-stage startups.
The CPS guidelines cover key considerations during the contract signing process, including capital contribution procedures, representations and warranties, and conditions precedent. They are designed to ensure that the domestic early-stage investment ecosystem aligns with international standards, reflecting key contract terms commonly used in the global startup investment market. This supports early-stage investors in encouraging responsible management and establishing reasonable mechanisms to protect management rights.
The SAFE Guidelines provide practical guidance on valuation caps and discount rate settings, focusing on the SAFE investment structure, which is highly utilized in the early stages when corporate valuation is difficult. They also include an explanation of indirect protections for SAFE investors, such as consent and information rights, that can be secured prior to stock conversion.
In addition, the association released guidelines analyzing the legal and practical risks associated with the venture studio model, in which investors participate as co-founders from the idea generation and team formation stages.
The Venture Studio Guidelines contain precautions for complying with the Venture Investment Act's restrictions on acquisition of affiliated company shares and requirements for qualified management control, which may arise as startup planners expand their management involvement. Furthermore, they outline the characteristics of each type of venture studio—subsidiary, professional management, and advanced business—and present startup support strategies suited to the era of deep tech and artificial intelligence, drawing on domestic and international examples.
The Chairman of the Korea Startup Accelerator Association, Jeon Hwa-seong, stated, “These guidelines will serve as a practical standard to reduce the legal uncertainty and inefficiency that early-stage investors experience in the field.” He added, “We will support the stable growth of the technology startup ecosystem by clarifying the legal basis for investment for the purpose of management control in accordance with the revised Enforcement Decree of the Venture Investment Act.”
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