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Artificial Venture Capital ( Vc ) Market And Overregulation As Limitation Of The Policy

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Artificial Venture Capital (VC) Market and Overregulation as Limitation of the Policy
7. (U) In addition to the limitations of the government-led “top-down” approaches to building startup ecosystem, unwise policy measures to cultivate a good venture capital (VC) investment environment is another limitation of the Creative Economy policy that must be addressed. In a 2014 research paper published in the Korean Journal of Financial Studies, Professor Song Chi-seung of Wonkwang University points out, while the government-led venture capital investments did play a considerable role in cultivating the VC investment environment in the ROK despite the global downturn of VC funds after the 2008 Financial Crisis, they now act as an impediment …show more content…

The strict regulations for foreign VCs such as a minimum required investment of USD 1 million and the minimum number of employees to hire are the fixed costs to the foreign VCs’ investment in Korean startups and SMEs, he said. Mr. Lim contended that venture capital investment regulations must be eased not only to attract foreign venture capitalists but also to provide startups and VCs a more convenient platform for exits through initial public offerings (IPOs) or merge and acquisitions (M&As). Furthermore, Mr. Lim observed that excessive regulations in other areas also prevent a robust growth of startup ecosystems. Specifically, the government’s positive-list approach to regulations preventing new services such as peer-to-peer (P2P) lending and Uber must be changed into a negative-list approach.
Controversial Roles of Chaebols in Building the ROK’s Startup Ecosystem
9. (U) Above all, the strongest criticism against the Park administration’s Creative Economy policy is the CCEIs’ dependence on chaebols for incubating startups and SMEs. The structure of CCEIs under which startups and SMEs must rely on the conglomerates for purchase of technologies, equity investment and marketing has drawn criticisms from both academia and political circles. The critics argue that the CCEIs have made startups and SMEs vulnerable to the conglomerates’ stealing of their intellectual property (IP) and forced them

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