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The government will extend the period during which startups can qualify for support by up to five years if they suspend operations for unavoidable reasons, such as military service, childbirth or childcare.
It will also ease requirements for lifting transfer limits on newly opened startup bank accounts and introduce official documentation to recognize entrepreneurs' efforts to rebuild after business failure.
The Ministry of SMEs and Startups said that it submitted the "Regulatory Rationalization Measures for Startups," which includes these contents, for discussion at the second plenary meeting of the Regulatory Rationalization Committee on Friday.
First, uniform startup support criteria will be improved. A special provision will be established to allow entrepreneurs whose businesses are suspended due to unavoidable reasons such as military service or childbirth to receive additional government startup support for up to five years, in addition to the existing seven-year startup recognition period.
Going forward, startups with less than three years of operation participating in government technology development (R&D) projects will be exempt from financial soundness evaluations. Previously, applications were restricted if the debt ratio was high or there was complete capital impairment.
Additionally, entities established with more than 50% equity investment by accelerators (ACs) will be included in the scope of startups to support the venture studio model. A venture studio is a model where startup planners and others provide professional personnel, capital, etc., to jointly establish a corporation with aspiring entrepreneurs.
Choi Kyung-won, director of Startup Policy at the Ministry of SMEs and Startups, said, "Although the venture studio model, in which startup planners such as ACs proactively form teams and participate as co-founders, is emerging, in our country, cases where AC equity exceeded 50% were not recognized as startups, resulting in exclusion from support."
The financial transaction environment for startups will also be improved. Newly created bank accounts are typically restricted to daily transfer limits of 1 million to 3 million won. Lifting these requires varying and stringent proof requirements depending on the bank. The government will organize a joint guideline LINE to improve this.
For the maturity extension of sub-funds invested in by fund of funds (Korea venture fund), consent from all investors was previously required, but going forward, extensions will be possible through consent from a certain level of investors.
Private pooled investment vehicles and venture company investment trusts will be added as recognized investment institutional investors for venture companies, with consideration given to phased expansion to asset management companies in the future.
The time and administrative burden arising from differing document requirements and evaluation criteria by each evaluating institutional investor when receiving technology evaluations from two specialized institutional investors for a technology special listing will also be reduced. To this end, common documents that can be submitted and standard submission formats will be prepared.
A foundation will also be created to utilize startup experience as an opportunity for re-challenge. The Honest Management Evaluation (Honest Failure System) will be redesigned as a "Re-challenge Window" linked with cross-ministerial restart special provisions.
The evaluation method will be reformed to focus on restart efforts from the perspective of technological commercial viability, and special support provisions related to restarting will be fully applied to Ministry of SMEs and Startups projects first, and significantly expanded through consultation with relevant ministries.
Startups by existing business owners previously excluded from startup support, such as cross-industry startups by individual business owners or solo startups by corporate officers, will be included in startup support.
A certification system allowing the issuance of a "Challenge/Startup Experience Certificate" for corporate representatives and startup preparation experience will be established, linked with the Ministry of Employment and Labor's integrated career certification service.
Director Choi said, "We will establish regulatory rationalization governance, such as a private association regulatory innovation network, for new industry sectors where technology changes rapidly but regulatory levels do not reflect this."
He added, "We plan to broadly identify regulations hindering startups and expand regulatory verification channels, such as the metropolitan-linked regulatory free special zone system."
[MoneyToday startup media platform 'Unicorn Factory']
in FUTURE
