South Korea to ease regulations for startup companies

The Ministry of SMEs and Startups has announced a comprehensive plan to rationalize regulations affecting startup companies, focusing on three key areas: improving startup support criteria, refining the financial and investment environment, and revitalizing re-entrepreneurship.

Under the new measures, the scope of qualified investment institutions will be expanded to include KOSDAQ venture funds and specialized private equity funds for startup ventures. This change allows investments from these funds to be recognized toward the requirements for venture company certification, provided they meet specific amount and capital ratio thresholds.

Additionally, the government will introduce exceptions for business interruptions caused by military service or childbirth, allowing up to five years of additional support eligibility. To support R&D, financial health requirements for startups under three years old will be moved from a preliminary restriction to a later evaluation stage, ensuring technology-focused firms are not excluded due to temporary capital impairment. The plan also addresses the 'venture studio' model, allowing companies to be recognized as startups even if an accelerator holds more than a 50% stake.