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Korea's VC ecosystem is a "gravel field"; regulations and institutions limiting investors need improvement

PolicyOctober 27, 20262 min read

Experts in Korea say the country's venture capital (VC) market is still weak because of rules and systems that tie investors' hands. They urged changes so that investors and startup founders share responsibility and power, and so that "free money" becomes long-term funding for real innovation.

What happened

At a policy forum in Seoul on the 27th, the Science and Technology Policy Institute (STEPI) and the Korean Economic Association discussed ways to help Korea's startup investment system grow. Three speakers gave talks on patient capital, "third-party" money, and regulation. Several other experts then joined a panel discussion.

Key ideas in plain words

A VC firm collects money from big investors and uses it to buy shares in young companies. Park Hee-deok said Korea's VC market is still a "gravel field" (rough and unfinished). He said it grows in size but not in quality, and it still acts like a bank instead of an investor. Kim Hong-il talked about "third-party capital," which is money that does not have to be paid back and is often called "free money." He said it should be used to fund real innovation. Lee Yong-kwan pointed to rules that block investors, such as limits on extra investment and required investment ratios.

Key facts

The forum was held on the 27th in Mapo-gu, Seoul.
Three main speakers: Park Hee-deok (patient capital), Kim Hong-il (third-party capital), and Lee Yong-kwan (regulation).
Lee Yong-kwan cited Jigu Holdings, led by Lee Jae-woong of Socar, as a good example of a more efficient investment firm.
Lee Yong-kwan suggested that Korea study the U.S. SBIR program, which gives federal money to startups through agencies in each field.

Why it matters

Startups need money that waits for results, because deep tech can take many years to turn into a product. If the rules keep investors from acting freely, the funding gap may continue. The experts say better rules, shared responsibility, and longer fund cycles could help Korea compete with other countries in innovation finance.

What to watch

Whether the government changes rules on extra investment and required investment ratios.
Whether standard board guidelines for private innovative companies are created.
Whether new fund structures with longer timelines and large growth funds are launched.

Glossary

STEPI: Science and Technology Policy Institute, a Korean government-funded research group that studies science and technology policy.
SBIR: A U.S. government program that gives federal research money to small businesses through agencies in each field.
Jigu Holdings: A Korean investment firm led by Lee Jae-woong, founder of the car-sharing company Socar.

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