Measures to Enhance the Effectiveness of Startup Financing: Based on a Case Study of the Korea Credit Guarantee Fund

Recently, the Republic of Korea has been focusing on vitalizing its startup ecosystem. In response, startup financing is also gaining importance. Therefore, this research aims to propose effective ways to support startup financing by exploring the cases of the startup financing programs managed by Korea Credit Guarantee Fund, hereinafter referred to as “KODIT”. KODIT is managing diverse startup financing programs including Startup NEST, First Penguin guarantee, guarantee with investment option, and Innovative Icon guarantee. Through managing such startup financing programs, it has developed the following recommendations to improve the effectiveness of its startup financing programs. We expect the following recommendations will provide relevant policy implications to startup support institutions in diverse Asian countries, where the role of policy finance is extremely important. First, the clear setting of the target customers should take precedence in designing startup financing. Second, much effort should be taken to reinforce the expertise and capabilities of the staff who are dedicated to supporting startups. Third, it is necessary to manage startup financing based on the diagnosis of the issues of the startup ecosystem. Fourth, the evaluation on startups should be made based on future growth potential. Fifth, there should be phased support in link with the management performance of startups. Sixth, startup financing should be supported comprehensively together with customized non-finance solutions.