South Korea’s financial authorities have decided to increase the size of the Fintech Innovation Fund from 500 billion won(US$379 million) to 1 trillion won to support fintech firms suffering from the liquidity crunch on rising interest rates and concerns over an economic downturn.
Chair of the Financial Services Commission (FSC), Kim Joo-hyun attended the Next Round 2022: Fintech Special Round, hosted by the Korea Development Bank (KDB) on Wednesday and announced plans to foster the fintech industry.
The Fintech Innovation Fund, of which the goal was to invest a total of 500 billion won in fostering and discovering promising fintech firms between 2020 and 2023, will expand to 1 trillion won as an additional 500 billion won will be injected over the next four years (2024-2027), Kim explained.
The fund was created in December 2019 with investments from major financial holding companies, banks and Koscom to make more investment funding available for innovative fintech firms.
Operated by K-Growth, it is a fund of funds that provides custom-tailored investments to fintech companies from start-up to scale-up stages.
Along with this, policy loan lenders such as the Korea Development Bank and the Industrial Bank of Korea, Korea Credit Guarantee Fund will strengthen fintech-specific support by supplying loans and guarantees worth more than 200 billion won per year.
The government also plans to create innovative growth funds worth 15 trillion won and introduce new loan schemes following the Silicon Valley Bank (SBV) venture debt model.
SBV refers to loans that are tailored to the needs and the risks associated with investor-backed startup companies that have already raised equity from venture capital firms or similar institutional sources.