SEOUL, Oct. 25 (Korea Bizwire) – An over-the-counter stock market for promising startups will open in South Korea in November to help them raise funds more easily and offer investors a chance to buy their shares, the bourse operator said Tuesday.
The Korea Exchange (KRX) said the stock market, named the KRX Startup Market (KSM) and slated to open on Nov. 14, will be focused more on technology-intensive startups than other OTC markets oriented toward unlisted large companies and middling firms.
Retail investors are thus expected to show interest in startups that have superb business items or boast high levels of technology with great growth potential, the KRX said.
Startups wanting to trade their shares on the KSM should meet a set of requirements: They should succeed in raising funds through crowdfunding programs online or receive recommendations from state-run financial institutions, such as the Industrial Bank of Korea and the Korea Development Bank.
“We are aiming to enable the KSM to serve as a springboard for startups to be listed on stock exchanges, such as KONEX and KOSDAQ,” a KRX official said.
South Korea’s stock market for venture firms and startups, KONEX opened in June 2013 as a bourse where fledgling businesses could raise funds more easily via stock sales than having to borrow from banks. The KOSDAQ is the country’s tech-heavy secondary bourse.
Market watchers said the KSM should make efforts to differentiate itself from other OTC markets in order not to fizzle out.
“To prevent it from lapsing into a board for fair-to-middling startups, the KSM should firmly establish its image as a market where investors can trade tech-intensive stocks that could carry out initial public offerings down the road,” said Lee Bo-mi, a researcher at the Korea Institute of Finance.