Korea’s venture capital and financial markets are joining forces to close the funding gap for startups. The Korea Venture Capital Association (KVCA) and the Korea Financial Investment Association (KOFIA) have signed an agreement under Korea’s newly passed Business Development Company (BDC) law, with the goal of expanding risk capital and reinforcing the nation’s startup financing ecosystem.
Korea Aligns Capital Markets and Venture Investment Under New BDC Law
The Korea Venture Capital Association (KVCA) and the Korea Financial Investment Association (KOFIA) have signed a Memorandum of Understanding (MOU) to activate productive finance, aiming to expand the supply of risk capital for startups and innovative companies.
The signing took place on August 28 at KOFIA headquarters in Yeouido, Seoul, just one day after Korea’s National Assembly passed legislation introducing the Business Development Company (BDC) framework.
By combining the investment power of capital markets with the specialized expertise of the venture capital industry, the two associations intend to build a stronger pipeline that supports companies from discovery through growth stages and into scale-up. The agreement is positioned as part of efforts to build a sustainable ecosystem for startup and innovation financing.
Leveraging New Policy Tools: BDC, Promissory Notes, and IMAs
The partnership comes at a time when Korea is mobilizing new policy and financial instruments amid concerns about slowing venture investment under high interest rates. The key focus areas include:
Business Development Companies (BDC)
A new investment vehicle passed by the National Assembly on August 27. BDCs are public funds that must allocate more than half of their assets to new businesses and venture sectors.
In the United States, BDCs have already established themselves as a primary source of venture funding.
Promissory Notes
Short-term financial products (maturities under one year) issued by securities firms with equity capital of ₩4 trillion (~$2.96B) or more. These instruments are in high market demand and have become an important source of capital raising for large brokerages. Five major firms — Samsung Securities, Hana Securities, Meritz Securities, Shinhan Investment, and Kiwoom Securities — are currently applying for licenses.
Individual Management Accounts (IMA)
Tailored investment accounts can be designed to channel more capital into corporate and startup investment.
The two associations confirmed plans to cooperate on BDC implementation, expand collaboration around corporate investment tools, and jointly design initiatives such as forums and seminars to increase investor awareness and support for innovative firms.
Industry Leaders Highlight Venture–Capital Market Synergy
Lee Jun-hee, Executive Vice Chairman of KVCA, emphasized the role of venture capital as a lifeline for startups:
“Venture capital is a core financing channel for innovative companies and startups. Through this agreement, collaboration between venture investment and the capital markets will be strengthened, enabling further development of the corporate growth ecosystem.”
Seo Yoo-seok, Chairman of KOFIA, underscored the policy significance:
“With the passage of the BDC legislation, the expansion of productive finance has emerged as a key national policy task. This agreement is therefore of great importance, and we will work to ensure a stable supply of risk capital to innovative companies through instruments such as promissory notes, IMAs, and BDCs.”
Strengthening Korea’s Startup Financing Framework
The agreement reflects a growing policy recognition that sustaining startup growth will require new capital market mechanisms, not just traditional venture funding. By aligning VC expertise with institutional resources, the initiative seeks to extend funding pathways beyond early-stage support, toward scale-up and global competitiveness.
As Korea positions itself as a global hub for innovation, the BDC law and its related mechanisms could become a cornerstone of the country’s financial architecture for startups, similar to the role that BDCs have played in the U.S. as a stable pipeline for venture capital supply.
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