Korea to ease regulations to boost CVC investments

2023 CVC Venture Investment Conference [Courtesy of the Ministry of SMEs and Startups]

The South Korean government is taking steps to boost the activity of corporate venture capital (CVC) investments through regulatory relaxation and fund creation support.

The Ministry of SMEs and Startups held the 2023 CVC Venture Investment Conference on Thursday, which was attended by key CVC players in the country.

CVC refers to venture capital established and held by corporations to invest in line with their business strategies.

During the conference, the ministry announced its plans to ease regulations related to CVC investments by expanding the external capital investment limit for CVCs of general holding companies from the current 40 percent of the fund’s total capital to 50 percent.

The limit for CVC investments in foreign companies will also be increased from 20 percent of their managed assets to 30 percent.

The government will also support CVC fund creation through a fund of funds. The government will allocate more than 10 percent of the annual parent fund investment budget to the Rookie League, dedicated to nascent VC funds, to assist emerging venture capital firms, including CVCs, in establishing themselves in the market.

The government is also considering the creation of a dedicated investment program to promote strategic investments such as mergers and acquisitions led by CVCs, to be launched next year.

“Global corporations, including those in the United States, are heavily invested in open innovation through CVCs,” said Lee Young, Minister of SMEs and Startups. “We have high expectations for Korean CVCs to play a similar role.”