A professional angel investment system in which founders and investment reviewers are granted certifications by authorities has been put into place. The new measure is expected to expand the landscape of the angel investment market, as professionals with abundant start-up and investment experience are given an opportunity to find promising future entrepreneurs.
The system is based on the Special Measures on the Promotion of Venture Companies and the enforcement ordinances, which became effective on July 15. Its purpose is to let more investors capable of sorting out promising firms enter the market and boost domestic angel investment by making the practice more systematic. In the new system, not only those companies that receive matching angel investment funds, but also those invested in by professional angel investors can obtain the venture firm title.
According to special measures, professional angel investors are defined as investors whose investment in stocks or equity newly issued by a venture firm, a founder, or an innovation-oriented company exceeds 100 million won (US$97,640) for the past three years. Specifically, the founders of listed companies, former and current registered directors at listed companies with a career of at least three years, those engaged for two or more years in start-up investment, private equity fund management and the like, those with PhDs in engineering and business, all qualify.
The government is anticipating that the new system will result in the supply of more funds into the venture ecosystem. According to the Korea Venture Investment Corporation, the cumulative investment of angel investment matching funds reached 28.4 billion won (US$27.7 million) as of April this year. The number of angel investors, which stood at just 1,115 a year earlier, increased by 1,400 or so in the first half alone.