The evaluation criteria for verifying venture companies are becoming closer to global standards.
The Ministry of SMEs and Startups (Minister Oh Young-joo, hereinafter referred to as the Ministry of SMEs and Startups) announced on the 1st that it will implement a revised version of the 'Venture Business Verification Guidelines (Ministry of SMEs and Startups Notice)' that will revise the evaluation criteria for venture businesses. The main revisions are as follows.
First, when verifying a venture company, even if it succeeds in attracting investment from a foreign investment company that is not well known in Korea, it will be recognized as having qualified investment performance.
Until now, the investment entity requirements for venture applicants under the 'venture investment type' to be recognized for overseas investment attraction performance were limitedly listed (▲Foreign investment companies that are special members of the Korea Venture Capital Association ▲Foreign investment companies with a track record of investment in domestic venture capital associations ▲Foreign investment companies affiliated with the Overseas Venture Capital Association). Because of this, there was the inconvenience of having difficulty immediately reflecting investment performance from overseas new VCs.
In the future, foreign investment companies that the Minister of SMEs and Startups determines have international credibility and investment performance can be immediately recognized as qualified investment entities. Our venture system will be able to respond quickly to changes in the global VC market.
In particular, it is expected that companies seeking investment attraction and listing opportunities based on networks with Korean venture capitalists operating overseas, such as in Silicon Valley, will be able to access the venture company system more conveniently.
Second, when verifying venture companies, their ESG management adoption performance can be explicitly evaluated.
Until now, venture companies applying for the 'Research and Development Type' and 'Innovation Growth Type' had to undergo quantitative and qualitative evaluations of their business growth potential, but the existing financial-centered evaluation indicators could only indirectly evaluate non-financial performance such as ESG management efforts.
In the future, the appropriateness of introducing ESG management will be formally and qualitatively assessed based on 14 detailed evaluation criteria, including environment (E), society (S), and governance (G). The evaluation factors will be operated in a way that grants additional points so as not to burden venture companies in the early stages of their business.
Through this, we can expect to strengthen the ESG competitiveness of our entire venture ecosystem, and in particular, it is expected that the utilization of the venture system by leading innovative management companies responding to national agendas such as climate change, low birth rate, and local extinction will be strengthened. We also believe that this will be good news for companies seeking to expand overseas while exploring global ESG trends.
Meanwhile, venture-confirmed companies can utilize special systems under the Venture Business Act (▲Issuance of multiple voting rights for unlisted companies ▲Granting of stock purchase options ▲Issuance of performance-contingent shares (RSUs), etc.), and are provided with additional points and preferential conditions in various policy projects, such as tax benefits, expansion of the Technology Guarantee Fund guarantee limit, and relaxation of KOSDAQ listing review criteria.
Kim Bong-deok, director of venture policy at the Ministry of SMEs and Startups, said, “We need to pay more attention to changes in the global venture ecosystem,” and “We will continue to work to ensure the continued growth of Korean venture companies and strengthen their global status.”
Detailed information on this revision of the 'Venture Business Verification Guidelines' can be found on the website of the Ministry of SMEs and Startups .
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