Pangyo Techno Valley in Seongnam, just south of Seoul, is an industrial complex being developed as South Korea’s version of Silicon Valley. (Yonhap)
SEOUL, Oct. 7 (Korea Bizwire) — South Korea said Wednesday that it will improve the venture capital fund governance system towards allowing venture capital firms to establish subsidiaries specializing in fund operation and management.
This move is part of efforts to boost the influx of foreign capital by introducing a Silicon Valley-type venture fund governance system, according to the Ministry of SMEs and Startups.
In foreign countries, individual funds establish a special purpose company (SPC) as a general partner (GP) to carry out fund formation and operation.
In South Korea, however, a single venture capital corporation operates various funds simultaneously.
These differences in governance systems have served as a stumbling block in the inflow of foreign capital, since foreign investors need to spend time for legal advice and review when making an investment in domestic funds.
Accordingly, the ministry plans to clear the way for venture capital firms to establish fund operation-specialized subsidiaries that can act as GPs to form and operate venture investment funds.
J. S. Shin (js_shin@koreabizwire.com)
