[Major market issues and venture industry news]

*No. 1.. The Financial Services Commission is going to create an additional 3 trillion won innovation growth fund. It’s a fund that focuses on AI and climate technology. It aims to create two funds worth 100 billion won within the year to raise about 15 trillion won by 27. What is unique is that more than 20% of the amount raised should be invested in more than 5 billion won.

*No. 2.. According to a complete survey of 305 locations disclosed in the e-newspaper, 4 out of 10 ACs do not invest at all. There are also 92 places that have not disclosed childcare programs. I didn’t expect that there will be so many ACs that do not invest or take care of children after consulting or personalized registration..

• No. 3.. The Agricultural Research & Extension Services will temporarily waive penalties for GPs who failed to form a parent fund, and change the standard of management and remuneration to the total amount of investment based on the total amount of investment. However, from the first year, a 20% mandatory investment ratio will be newly established..

*No. 4 and No. 5.. Only 19 out of 52 start-ups with the highest competition rate among the first batch of regular admissions were accepted. Among the large companies based on AUM standards such as Sinven, Smage, NowIB, Hana Ventures, and We Ventures, only Sinven and Smage passed, and among the small companies, Infobank, New Paradigm, and Pohang University of Science and Technology Holdings are noticeable. In the newly applied rookie field, 23 out of 35 survived. The request for investment of 100 billion won reached 255.6 billion won, recording a rather high competition rate of 2.5:1..

*No.7.. Ajou IB’s Accelerator Business Group has made a 100 billion-dollar fund. I don’t think this is going to be the only investment in Free A. Is it real?

*No. 8.. Toss Bank is going to be listed, and it is expected that it will be prepared after the turnaround. However, if PBR 2.28 times applied when listing on Kabang is applied to net assets as of the third quarter, the corporate value is 1.8 trillion won, which is a wide gap from the 15-20 trillion won that the market calls

*Number 9.. I interviewed Chairman Sohn Tae-jang who acquired Softbank Ventures in JoongAng Ilbo. There was a rumor in the market that he sold the Vision Fund due to the sluggishness of the Vision Fund and the financial situation of the Softbank parent company, but he denied it face-to-face. According to Chairman Sohn, Vision Fund only invested in pre-IPO and came down to the initial stage, and expressed concern that there was a conflict of interest within Sobang Group. In other words, if Vision Fund can’t invest in a good company invested by Ventures Korea, LPs hate it if it goes well. And there are cases in which it is the opposite. That’s why Sobang Group sold Korea to solve it, and acquired it through bidding. Also, he added a personal explanation that he felt the limitation of his financial power as an angel investor, so he took over the VC establishment because it took too long. But.. Among the companies invested by Ventures Korea, how many companies will Vision Fund invest in? And the opposite case is even more..

*No.13.. Legal tech companies are shaking at the news that a global legal tech monster will land in Korea. In Korea, there were many restrictions on using data because of the checks of the Korean Bar Association, but now it has become more difficult when Lexis Plus AI, the No. 1 legal tech company in the U.S., launches it. Let’s read it!

14.. Lastly, check the attacks of Temu and AliExpress, which are famous these days. But it’s MAU. I think it’s meaningful because I think a lot of people will sign up for a cheap one and go in once a month..

1) An additional 3 trillion won in innovative growth funds will be created, 5 trillion won in mid-sized corporate funds will be completed by the end of the year… “AI and environmentally intensive investment”
An additional 3 trillion won worth of innovative growth funds will be created this year, and a fund of mid-sized companies worth 5 trillion won will also form a self-funded fund within this year. Innovative growth funds are expected to focus on funds raised in artificial intelligence (AI) and climate sectors. The Financial Services Commission held the 6th Policy and Financial Support Council meeting presided over by Vice Chairman Kim So-young on the 6th to discuss agendas such as “How to Create a Fund for Medium-sized Enterprises” and “Plan to Create an Innovative Growth Fund in 2024. The second-year investment plan of the Innovative Growth Fund, which will be formed with 15 trillion won by 2027, plans to conduct investment projects to focus on two funds worth a total of 100 billion won in AI and environmental sectors within the year. Starting this year, management companies that invest more than 20% of the fund’s formulation in AI fields such as AI semiconductors and artificial intelligence, and environmental fields such as carbon neutrality and green economy will be given priority selection rights. In addition, the fund was designed to invest more than 20% of the formulated amount in a scale of 5 billion won or more. In the case of funds exclusively for mid-sized companies, it plans to recruit self-funded management companies from May.

2) “Four out of 10 accelerators have no investment”… Improvement of management and supervision of start-ups planners
Nearly 40% of domestic start-up planners (accelerators) had no investment performance last year. According to the electronic newspaper, 114 ACs (37.3%) did not execute investment last year as a result of a total survey of 305 startup planners (as of January). There were also 92 ACs that did not list childcare programs. It was found that 110 ACs had no investment performance at all in 2020. The current law imposes investment obligations on early start-ups within three years after AC registration, but the “ghost AC” problem is repeated. The Ministry of SMEs and Startups has recently begun to come up with measures to improve AC management and supervision. By July, it plans to derive measures to strengthen AC supervision by analyzing the detailed status of AC and differences between venture investment companies. It seeks measures to strengthen supervision by grasping the composition of investors in individual investment associations and methods of investment execution and fund management. Currently, the number of individual investment associations is 3,682.

3) Agricultural Finance Agency exempts ‘temporary’ penalty for failure to form a parent fund
On the 5th, the Agricultural and Forestry Fund held a briefing session on the regular investment project of the Agricultural and Fisheries Fund. What received attention was that it decided not to impose investment restrictions temporarily on members of the business execution who failed to complete the formation of the union due to voluntary withdrawal without extending the deadline for formation this year. The Agricultural and Forestry Fund announced management fees △ financial matters △ mandatory investment ratios by year as detailed changes in the investment project. First, the conditions for receiving management fees will be changed from 1% of the total amount of existing investment and 2.1% to 3.0% of the investment balance to 2.1% to 3.0% based on the total amount of the union agreement. However, after registration of the union, the mandatory investment standard was established for more than 20% of the investment agreement amount within one year. Previously, there was no investment in the first year, but 40% in the second year, 60% in the third year, and 80% in the fourth year. In addition, the investment business was changed, and the pet and traditional liquor fields were newly established in the special purpose field. It aims to form a self-fund of more than 10 billion won each. One association is selected for the fisheries investment account with the newly established blue food technology field. The investment ratio of the parent fund is 60%, and it aims to form a self-fund of more than 20 billion won.

4) Rookie Sector Survives Two-thirds ‘Unusual’… Expectations to Increase Investment
According to the Korea Venture Investment’s announcement on the 7th of the “MOTA Fund’s first regular investment in 2024 (under the jurisdiction of the Ministry of SMEs and Startups),” a total of 23 operators passed the document screening in the “initial” field. Of the 35 companies that submitted proposals last month, about two-thirds survived. This is unusual considering that many applicants were selected in the document screening in other fields. Of the 51 companies that applied for the initial start-up sector, which attracted the most applicants, only 19 or one-third survived. In the youth start-up sector, where 30 companies were concentrated, only seven, which account for one-quarter, passed the document screening. This was the method of dividing the rookie league by each field of support, but this time, the rookie league was integrated into a separate field and the investment amount of 100 billion won was allocated separately. At the same time, he was offered a proposal for a scope of investment that was his main focus, and he also announced his plan to allocate more funds to the VC that presents innovative ideas. Some expect high additional investment allocation due to the high rate of passage of document screening. However, although many operators passed the document screening in the rookie sector, it is difficult to be sure of an increase in investment, given that the competition rate is not higher than that of young or early start-ups. Considering that the investment request amount is 255.6 billion won and the allocated investment amount is 100 billion won, the competition rate is 2.5 to 1. It is a meaningful indicator because you do not know how many will be selected, and the competition rate does not reach 2-1 in other areas except for the youth start-up sector (2.5 to 1) and the beginning of the start-up (3:1).

5) Early start-up with high threshold, mid-sized VC split
According to the Korea Venture Investment’s announcement on the 7th of the “Result of the 1st regular investment (under the jurisdiction of the Ministry of SMEs and Startups) document review for 2024, 19 out of 52 management companies passed the document review in the initial field of start-up. Among the 19 companies that passed the document review, two large VC (Shinhan Venture Investment, Smilegate Inbe) with more than 1 trillion won in management assets (AUM) are attracting attention. Last year, Stone Bridge Ventures and Intervest, which had 1 trillion won worth of AUM in the early (general) field of start-up of second round of investment on time, passed the document review, and secured 2 out of 4 final GP seats, which shows a possibility of going in a similar manner. However, when looking at the elimination of large companies such as NowIB and Hana Ventures, AUM does not seem to be an important factor. Among the companies classified as mid-sized companies, only We Ventures, which is around 400 billion won in AUM, survived. The survival of accelerators New Paradigm Investment, Infobank, and Pohang Tech & Technology Holdings is also somewhat noticeable.

6) Ministry of Science and ICT to Create SaaS Innovation Fund… At least KRW 33.3 billion
The Ministry of Science and ICT announced on the 5th that it will recruit two management companies to manage SaaS (software as a service) innovation funds through the announcement of the second regular investment project of the parent fund announced by Korea Venture Investment. SaaS innovation fund is the first fund to be tried after the Ministry of Science and ICT confirmed SaaS as a key investment area. The goal is to ensure that startups and small and medium-sized companies in SaaS fields settle in the market stably and have global competitiveness. The two management companies, which are scheduled to be selected through this announcement, will be able to invest in promising SaaS companies for four years by creating funds worth at least 33.3 billion won by attracting private capital such as financial institutions and pension funds based on the Ministry of Science and ICT’s investment of 20 billion won