• Asia-Pacific Journal of Business Venturing and Entrepreneurship
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• v.17 no.6
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• pp.1-12
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• 2022

This paper put the goal on boosting up early startup investment by delivering and positioning SAFE as the main early startup investment type in Korea. In particular, this paper proves the better fitting of SAFE as to the early stage of venture investment than these of Convertible Note. This paper as referring the previous studies of SAFE as the major keystone issues determining active SAFE applying (legal positioning issue, tax treatment issue, failure of inducing the following investment with uncertainty over maturity) proposes boosting up policy of Korean SAFE. First, as to accounting treatment of SAFE, it suggests SAFE to recognize legally as "the capital" on the Korean Venture Investment Act of introducing SAFE actively as venture investment type. Second, as to tax treatment issue, it proposes on amending venture indication rule as the best alternative of resolving tax issue by accepting SAFE as the investment meeting to venture investment requirement. Third, as benchmarking foreign cases, it delivers the method of modifying foreign SAFE Contract Format by adding up more clauses about safety vehicles against the failure of the following investment and fixing maturity date and event. Ultimately, all resolutions of this paper fall on highlighting the role of Korean Venture Investment Act and Ministry of SMEs and Startups.

• Korean small business review
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• v.39 no.2
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• pp.89-107
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• 2017

This study investigates the effect of risk avoiding activities and characteristic of venture capital on the financial performance of invested companies. Based on the review on the literature, we present staged financing, syndicated investment and preferred stock investment as the measurements for risk avoiding activities. Types and age of venture capital were chosen as the variables for characteristic. The financial performance data of the invested companies was derived from their publicly announced yearly financial report. Data were analysed using logistic regression technique. The result show that syndicated investment and independent venture capital have positive influence on the growth of sales revenue and asset of the invested companies. Age of venture capital appears to be positively associated with growth of sales revenue. Staged financing and preferred stock investment, however, have no impact on any financial growth and profitability. Activities and characteristic of venture capital show no influence on the profitability.

• Asia-Pacific Journal of Business Venturing and Entrepreneurship
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• v.11 no.1
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• pp.85-95
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• 2016

Generally a venture capital aims at investment and support Venture businesses that signifies a start-up which has high technologies but frailty of the economy so that raise fund from financial agencies at high risk rate, it has high risk but when the venture businesses launch into general orbit, the venture capital guarantee high-rate profits. Venture capital do not just provide risk capital but also takes a role as a mentor for continuous growth with total consulting service at business and technical management. Also it offers in-depth support to reform the supported enterprise in order to enhance the competitive. Venture capital receives attention for years as a principal agent to be promoted strategically at national level. Bio venture, a major concern of venture capital and one of core industries in Korea, is different from other industries because it needs long-term and large scale of investment. these factors bring about difficulties in an investment and growth. Therefore, it is very important to identify growth and profitability of start-ups and small and venture businesses with long-term appreciation above all other industries. This research analyze management results of bio venture businesses empirically by investment from venture capital. according to the results, bio venture businesses need huge capital and a long gap of time, henceforth, formation of model for growth is necessary with angel investing as well as venture capital. Since, there are not many listed bio venture businesses, significant statistical result would be limited. This research studied at only economic focus but further study need to examine a question from various angles.

• Asia-Pacific Journal of Business Venturing and Entrepreneurship
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• v.11 no.4
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• pp.27-36
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• 2016

Venture companies, which can commercialize various kinds of new ideas and creating added value, are amid of great attention. Since most of venture companies in initial development stages cannot finance its capital sufficiently all by their own, investments from outside investors are key factor to their survival. However, they have lots of difficulties in financing from outside investors because of their typical uncertain but favorable investment characteristics. Moreover, even though they had successfully financed from outsiders, problems related to their stakeholders, such as interrupting in management and types of investments, cause contrary results to firms. Therefore there are various kinds of systems for startups like angels, venture capitals and governmental supports. Even so, investments and supports for venture companies are still not sufficient. 'Accelerator', which is a brand-new investment type started from Silicon Valley in United States during the mid 2000, is growing attention these-days. It mainly supports startups financially in the initial development stages, however, it also supports the firms by providing mentoring, education and networking services. On the other hand, difference between existing investment types and performance of the investment is still in controversy. Therefore this study compared investment behavior between accelerator and venture capital. As a result, we found that the difference in investment behavior of accelerators and venture capital.

• Journal of Technology Innovation
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• v.26 no.4
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• pp.29-56
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• 2018

The purpose of this research is to examine whether investment portfolio composition affects the technological performance of corporate venture capital (CVC). The stages of investment are categorized from "start-up/seed", "early", and "expansion", to "later" stage. We posit and test that the investment stage composition in a portfolio is highly correlated with the growth potential and downside risk of the portfolio, which in turn influences an investor's innovation performance. To test this hypothesis, we used negative binomial panel regression with 21 years of deal data from 70 cases of CVC. The results show that there is an inverted U shaped relationship between investment portfolio composition and technological performance. This means that the more seed or early stage investment within the investment portfolio, the higher the innovation performance; however, if the amount of seed or early stage investment is over a certain level, the performance decreases. Further, this study finds that the external partners of a venture negatively moderate the inverted U shaped relationship between portfolio composition and innovation performance. We believe that corporate planners, venture capitalists, and policy makers will be helped by these results showing that companies can maximize their investment performance by considering the investment stage and progress of investments.

• Asia-Pacific Journal of Business Venturing and Entrepreneurship
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• v.15 no.1
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• pp.1-15
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• 2020

This study analyzes the innovation performance of venture firms according to existence of venture capital investment, and according to type and ownership of venture capital. Venture firms are IPO firms that are registered on KOSDAQ between the year 2000 and 2016. They are categorized as corporate venture capital-backed firms (CVC) and independent venture capital-backed firms (IVC). Using patent data from KIPO (Korean Intellectual Property Office), we employ the number of patents and the citations per patent as the measurement of the innovation output. We find the positive association between the venture capital-backed firms and the number of patents before going public. Corporate venture capital-backed firms are positively associated with the number of patents before and after IPO. However, we do not find strong evidence between the number of citations and the existence of venture capital investment or the type of venture capital. Lastly, we provide an inverse U-shaped relationship between the innovation performance and venture capital's ownership. In other words, the innovation output, both the number of patents and the number of citations, gradually increases as the venture capitalist's ownership increases, but also shows a decrease pattern, suggesting that the venture capitalist's ownership does not only spur the innovation but also gives a negative effect on venture firm's innovation output such as excessive intervention. Overall, we reveal that the most important factor for the innovation performance is not the existence of venture capital investment or the type of venture capital, but the ownership of the venture capitalist.

• Asia-Pacific Journal of Business Venturing and Entrepreneurship
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• v.1 no.2
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• pp.157-192
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• 2006

Since the late 1990s, the Korean Venture Capital Industry has been remarkably grown in the aspect of quality and quantity. Korean government expects that the Venture company and Venture Capital Industry would contribute to the recovery of depressed Korean economy and restructuring of the high cost and low efficiency economic structure. Korean government reinforces supporting policies for the Venture Capital and Venture Business. Venture Capital is defined as the form of high risk and high profit investment capital growing the small & medium enterprises to competitive ones through capital and management support and collecting the capital. According to the Gompers and Lerners the venture capital cycle consists of raising investment capital, screening the investment opportunity and invest the money. And later, sold the retained stock to the other investor or to the company. This stage called EXIT Consequently, the function of the venture capital, which supply the fund and the business consultation to venture business, have been emphasized and how to effectively run this capital have been recognized as the way to develop the venture business. In this regard, the problem in Korean Venture Capital Market is as follows. First, most of the sources of fund depends on the government support and this conflict with the nature of risk capital because the government capital emphasis the stability than profitability. And secondly, the efficiency of the venture capital system in Korea do not reach that of the advanced countries due to many kinds of restriction and the rack of support. Consequently, the Activation Schemes for Korean Venture Capital Firms are as follows. First, the sources of venture capital need to diversify from angels to institutional investors such as banks, pensions, fund of fund. And Lastly, the internal management and operational system of venture capital companies should be strengthened by quality to that of global Venture Capital Firms.

• Asia-Pacific Journal of Business Venturing and Entrepreneurship
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• v.1 no.1
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• pp.179-199
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• 2006

The objective of the study which it analyzes the result which goes made to the equity investor venture company IPOs stock of Korean venture capitalists. The sample company is the venture business 101 which IPO time venture capitalists invest in period KOSDAQ market from 1997 July 1st to 2006 June 30th for 9 years. The result of the study was as follows. First, it is found that syndication investing venture capitalists than the sale investing venture capitalists has desirable investment act which relax non-symmetry information between the publicly held company and the investor. The study support to Bygrave(1987), Lerner(1994) and so on. Second, The venture capitalists under postscript investing the venture business compared to under investing shows IPO excess benefit rate initially more highly from the venture business and the investor whom already invests early stage prove to use the manned it exaggerates the value of the venture business which venture capitalists oneself invests from postscript phase through the high position characteristic At last, it is discovered that the investment equity ratio of venture capitalists effect of sound (-) postscript investor IPO result which analyzed. It is showed that venture capitalists will remain more lowly excess benefit rate as the equity ratio which the venture capitalists invests at the venture business will be high.

• Asia-Pacific Journal of Business Venturing and Entrepreneurship
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• v.11 no.2
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• pp.75-87
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• 2016

This study examines the impact of government funds to venture capital on investment in early-stage firms. We provide novel explanations about this relationship focusing on mechanisms by which government funds influence the perceived uncertainty, decision about investment priority, scale economy of investment, information asymmetry in investment decision, and capital expense. We argue that venture capital's investment in early-stage firms increases as government funds increase and as government funds are explicitly directed for early-stage firms. However, we further claim that the impact of government funds on early-stage investment will be decreasing as their size increases and finally be reverted to negative impact beyond a certain amount of funds to show inverse-U relationship. Our empirical examination using data from 105 Korean venture firms active as of 2013 consistently supports the claims. This study contributes to the venture capital literature by providing novel arguments about mechanisms and effects of policy intervention in venture capital. In practice, we expect our results will provide an opportunity for relevant policy makers to review their venture support policy based on empirical evidences for policy effects.

• Journal of Technology Innovation
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• v.6 no.2
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• pp.178-207
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• 1998

This article suggests a methodology to decide the priority of investment project for venture business under the dynamic circumstance. By the Monte Carlo procedure on the probability distribution of cost and revenue, the model simulates the investment project to estimate profit ratio and risk. The profit ratio is calculated on the yearly basis for the relative comparison. The project risk is calculated as semi-variance under the target yield. After sufficient simulations in this fashion for several projects, the efficient projects with more profit and less risk are selected by the dominance principle. Then the regression equation of the selected projects is produced to find the relative value of the projects. The relative value is obtained through dividing the raw profit ratio by the estimated one on the equation. This value shows the degree to which the simulated project yields over the equation. The priority of investment is decided by this value. An examplary venture business of chemical development for semi-conductor is presented as a case study.