What is the ‘start-up support policy’ that Moon Jae In 1st Street will deliver?
Three days have passed since the Moon Jae – in administration took place since the 10th of May. Indeed, the new government had shown great deal of efforts to actively communicate with the public, almost making people think that the new administration had done greater amount of interaction over two days than that of the previous government (Park Geun Hye) over the past four years.
Among Moon Jae In’s various election campaigns, website called ‘Moon Jae In 1st Avenue’ drew a lot of attention, as it is a novel attempt to raise awareness of their own political stance and pledges in the form of e-commerce model. As Moon Jae In is now officially the elected-president, ‘Moon Jae In 1st Avenue’ has a pop-up window that reads ‘it will start shipping the goods(policies) you purchased. President Moon had come up with several new policy suggestions specifically for the startup industry during the six official debates and other events. We would like to present an organized summary of what those are.
Establishment of the ‘Fourth Industrial Revolution Committee’ under the direct control of the President, nation-led vitalization of start-up scene.
Former presidential candidates Moon Jae-in and Ahn Cheol-soo, who had a strong rivalry until the middle of the campaign, had different approach for startup industry. While candidate Ahn Cheol-soo insisted on market-led vitalization of startup industry, President Moon Jae-in supported government-led approach.
One representative pledge that proves his stance is the establishment of the ‘Fourth Industrial Revolution Committee’. It will support the core technologies related to the fourth industrial revolution such as electric cars, autonomous vehicles, renewable energy, artificial intelligence, and industrial robots. Last April, the President appointed Chang Jae Il, a congressman of Democratic Party who led the third industrial revolution-related task at the Roh Moo-hyun government in the past as the chairman of the Fourth Industrial Revolution Committee.
Ministry of Science, ICT and Future Planning, one of the main pillars of the Park Geun-hye government, had dealt with tasks related to areas of science technology and information communication. President Moon Jae-in has been insisting that the government should divide its support efforts separately into one for science technology and one for information communication. In the current status, areas related to Fourth Revolution are scattered across many different ministries. The whole point of the new committee is to gather those fragmented efforts into a collective one under one committee. will be gathered by the 4th Industrial Revolution Committee during the regime. It also includes the idea of making it an industrial revolution.
A budget of 2.5 trillion won is allocated to support start-ups, small business owners and small and medium-sized enterprises
According to the list of a presidential election pledges, the President hopes to execute a total budget of 178 trillion won over the term of five years. The annual average is 35.6 trillion won. Among them, the amount allocated to supporting entrepreneurship, small business owners, and SMEs is about 2.5 trillion won per year, which is about 7% of the total budget.
What draws our attention is that lower the bar of establishing a venture capital firm by lowering the standard of paid-in capital as 5 billion won as a qualification to make a VC firm. If this really happens, then we can expect more angel investments for startups.
Project name : ‘Roly Poly (It’s okay if you fail)’
Another interesting pledge of his is the project Roly Poly. It is basically to guarantee entrepreneurs that they can revive even after failure, benchmarking from the culture in Silicon Valley. We expect to see an enhancement of a culture where people can take risks without fears of total failure. More specifically, this project includes ‘the establishment of a third-generation rescue fund’ and ‘abolition of the bond guarantee system’.
On 10th last month, Moon Jae-in, who was a candidate at the time, mentioned that the government would like to support revitalization of startups subsidizing up to three times Also, he mentioned that he plans to expand the re-start-up funds of the Small and Medium Business Administration. He said, “standing joint surety for the CEO of startups is the biggest obstacle to making the culture of entrepreneurship as it makes everyone involved delinquent borrowers and completely lose credibility” and ensured the abolition of solidarity guarantee.
The following is an excerpt of the contents related to startup scene.
[Founding fund, support for market]
- Establishment of youth account in fund-of-funds
- Expansion of funding for young entrepreneurs
- Financial support for young entrepreneurs on their four major public insurance
- Expansion of support funds such as foundation support fund, fund-of-funds, and angel matching fund
- Guarantee government’s participation in start-ups funding
- Providing grants to entrepreneurs, SMEs, and venture companies on public patents
- Cutting data costs for IT startups
- Reduction of paid-in capital for the establishment of a startup investment company (currently over KRW 5 billion)
- Education for rejuvenation of failed startups
- Project Roly-poly
- abolition of standingjoint surety
- Adoption of negative regulation on new industries
- Elimination of regulation on public data usage by establishing public Big Data Center
- Elimination of Reverse discrimination against small businesses
- Expansion of duration of keeping the status as SME for start-ups acquired by conglomerates (currently 3 years)
- Removal of Active X
[Commitment to Support for Fourth Industry]
- Smart car industry: Develop eco-friendly and smart car industry ecosystem such as rechargeable battery, electric car parts, charging infrastructure
- New and renewable energy industry: Medium and large sized lithium secondary battery industry for electric vehicles, energy storage device (ESS), carbon capture and storage (CSS), smart grid (transmission and distribution equipment)
- Fusion composite new industry: bio, 3D printing, big data, artificial intelligence, virtual reality, augmented reality activation support
- Biotechnology and pharmaceutical industry: Establishing a mid to long-term comprehensive plan to raise policy predictability, improving the drug price structure to promote new drug development in Korea, and establishing drug development ecosystem
- Drones Industry: expansion of flight test grounds and control centers dedicated to drones, development of special license system for flying drones in out of sight areas, development of logistics drone
- Expanding the Small and Medium Business Administration to small and medium-sized venture companies
- Unification of policies separately distributed across many ministries