Korea’s SMBA Certifies Designated Angel Investors
On September 25, Korea’s Small and Medium Business Association (SMBA) officially acknowledged startup companies with investments from individual angel investors as venture companies, a legal status that grants tax benefits and eligibility for support in various areas, such as government-backed credit guarantees. In the process, the SMBA certified eleven specialized angel investors. Startups with investments from these specialized angel investors now qualify as officially recognized venture companies.
Previously, more than ten percent of a company’s total capital had to be from investments from venture capital (VC) firms or organizations in order to qualify as a venture company. From now on, investment from the certified angel investors could also bump a startup to venture company status.
Startup companies that receive investments from specialized angel investors would receive government support of up to half million dollars for R&D or marketing. This would allow startup companies to receive government benefits along with the investment from their individual angel investors.
In order to be selected as a specialized angel investor, individuals need to have invested more than $100,000 in the last three years and also need to have co-founded a startup that went public, and have at least two years of experience as an investor.
The South Korean government, which plays an active role in the venture capital market, hopes that these policies will jumpstart and increase angel investments. Angel investments in South Korea declined steadily after the collapse of the dotcom bubble in 2000, when total angel investment in South Korea was 549 million USD. In 2011, the numbers fell to 29.6 million USD. The administration hopes that startups, with investment from venture capitals and angel investments, would create new jobs and improve the job market.