ESSAY : Venture Capital in Korea ? Special Law to Promote Venture Capital Companies

... The National Assembly in Korea recently passed a law envisioned to promote venture capital companies in Korea. ... Each venture capital company is incorporated under one of these laws. ... Korea's legislative history indicates that, through the enactment of the SLPVCC, the Korean government strove to emulate the success of the United States' venture capital system. ... The new law in Korea ultimately may form a significantly different incentive structure than that in the United States because the law provides a specific statutory definition for a Korean venture capital company. ... A. Definition of a Venture Capital Company Under the SLPVCC ... There is no statutory definition of a venture capital company in the United States. ... First, a venture capital company must at least invest 20% of a company's total assets. Second, a venture capital company must at least invest 10% of the total equity of a company. ... Further, special treatment may distort the fundamental capital structure of a venture capital company. ... If an entity qualifies as a venture capital company, entrepreneurs in Korea become eligible for special treatments. ... Perhaps contrary to its original intent, the SLPVCC may distort the market mechanism and impede the development of the market for risky investment in Korea. ...