Fellow Koreans, leaders of business ventures,
The Republic of Korea is now ushering in an “Era of Overtaking” that will move us beyond our “Era of Pursuit”. Taking the lead in the Fourth Industrial Revolution and the post-COVID-19 future, our economy is transforming into a pacesetter from a fast-follower.
At the center of this change are startup business leaders. Twenty years ago, the first generation of business venture leaders laid the stepping stones for Korea to emerge as an IT powerhouse. The second generation after them is now at the forefront of the new challenges being taken on by our economy.
Today, the first and second generations of startup leaders, would-be startup entrepreneurs and venture investors – the main players behind our accomplishments – have been brought together here. Sharing successful and unsuccessful experiences will enable us to reach new heights. I am deeply grateful to business venture leaders whose creative ideas and spirit to take on challenges are opening up our future. I hope this event will serve as an opportunity to look back on the progress made to date and make a new leap forward.
Fellow Koreans, leaders of business ventures,
The second venture boom is marked by more mature and evolved aspects in both scale and quality than in the first boom. Compared to that time, the number of business ventures has more than quadrupled to 38,000. Despite the COVID-19 situation, the amount of new annual venture investment broke the 4 trillion won mark for the first time last year, more than doubling from two decades ago. The number of incorporated startups and amount of funds raised have also reached record highs.
Another significant difference from the past is that startups and business ventures now have a firmly established ladder of growth as a mutually beneficial venture ecosystem has taken root. The first-generation venture entrepreneurs set up venture capital firms or startup accelerators to lead the way for those coming up after them. Large businesses have also been providing support to grow startups into innovative partners by fostering in-house business ventures. The Government has pitched in as well.
We launched the Ministry of SMEs and Startups – the only new ministry founded since my Administration’s inauguration – and financed a 4.8 trillion won fund of funds to supply large pools of capital. In addition, various systems have been innovated: The joint and several liability system required by state-owned financial institutions have been abolished, and a regulatory sandbox system has been introduced.
On the foundation of a “prearranged venture boom” that differs from the first one, our business ventures have made an even greater leap forward. The number of unicorn companies increased to 15 from the meager three in 2017. There are also 357 prospective unicorn businesses.
Our venture companies are making strong strides in the stock market as well as in the global market. In terms of market capitalization, four of the top 20 KOSPI-listed firms were once startups, and 13 of KOSDAQ’s top 20 are business ventures. An increasing number of these venture companies are being listed on the New York Stock Exchange and other global stock exchanges. More foreign investments have also been attracted. The first venture boom focused on dot-com companies. In contrast, it is all the more pleasing to now see success models being created in a variety of new industries such as information and telecommunications, biohealth, pharmaceuticals and digital-based logistics and services.
They have also become reliable key players in job creation. They have already outstripped the country’s four leading business groups in terms of the number of workers employed. Business ventures were employing 67,000 more people as of the end of the first half of this year compared to the same period last year – significantly helping to overcome the COVID-19-induced employment crisis.
Business venture leaders,
The Government will continue to provide vigorous support going forward. We will ensure that Korea becomes one of the world’s top four venture powerhouses by providing detailed assistance for starting new businesses, helping them grow and recouping investments as well as supporting rebounds after setbacks.
First, we will further bolster innovative, technology-driven startups. The part of the budget earmarked for supporting startups will be intensively channeled into promising new industries, and we will quickly establish regionally based startup clusters. The number of new technology-driven startups, which has been around 230,000 per year, will increase to 300,000 by 2024.
Second, we will help ventures grow rapidly by facilitating the inflow of talented individuals and capital. In a bid to attract excellent professionals, the tax levied on stock options will be significantly lowered so that they can become a substantive incentive.
Venture investments will receive more support. We will raise 1 trillion won worth of new funds to be used exclusively to expand investment in early-stage startups that often involve high risks. Losses from public-private joint venture funds will be initially covered by the Government, and profits will be distributed to the private sector first to allow more capital in the market to flow into business ventures.
We will also create conditions that allow businesses to receive large investments without risking the loss of management control. We will ask the National Assembly to cooperate by passing as soon as possible proposed legislation that would allow unlisted startups to issue multiple voting shares.
Third, the M&A market will be revitalized so investment funds can be recouped without much difficulty and reinvested. We will establish a technological innovation M&A guarantee program to support the acquisition of business ventures by SMEs and middle-market companies. A new 200-billion-won M&A fund will also be formed. We will make rational changes to related regulations, so listed companies can actively utilize these funds to merge with venture companies.
Fellow Koreans, business venture leaders,
The more challenges we take on, the further we progress. The more innovation we achieve, the farther we can leap forward. While preserving the confidence gained in our “Era of Pursuit,” we need to find a new success strategy that is suitable for our “Era of Overtaking.”
The venture industry is the solution. Business ventures themselves constitute innovation and a pioneering spirit. When the number of business ventures increases rapidly and they grow, countless ideas and possibilities will become realities right before us. We support business venture leaders’ vision and willingness to take on challenges. They represent the present and future of our economy. Let us move forward toward a pacesetting economy together.