Nurturing ‘Korea’s Tesla’
With the implementation of a policy to nurture Korean versions of Tesla imminent, Korean start-ups are turning their eyes to raising funds through IPOs.
According to the Korean Exchange on October 24, the Growth Potential Evaluation and Special Listing System will be established in the KOSDAQ market next month. At the moment, the headquarters of the KOSDAQ market is working on making detailed screening regulations for the implementation of the system.
This system advocates the so-called “Tesla conditions” which allow the listing of a company with great growth potential even though it does not generate profits. This system is designed to give start-ups springboards for growth just as Tesla could grow into a global company through its IPO in the US NASDAQ market even though the company posted loss.
It is said in the venture start-up industry that the imminent introduction of the system boosted major promising start-ups’ growth potential a great deal. “The environment is becoming positive as various start-ups were given opportunities to grow as they could not catch such opportunities due to their losses even though they have strong brands and their sales are on a sharp rise.
It is also expected that the special system will attract Korean start-ups leaving for overseas stock markets. In fact, a start-up which considered going to the NASDAQ market put its plan on hold, saying that they will consider being listed on the KOSDAQ market when conditions for the special system are fixed.
But some experts still opine that start-ups will feel a big burden about being listed on the stock market. “Start-ups need some preparations to be listed such as the expansion of their sizes and sustainable growth,” said a representative of a start-up. “Without them, it is not easy for start-ups to have their IPOs.” Accordingly, even though there is a way for start-ups to be listed despite their deficits, many start-ups still stick to their plans to have their IPOs after posting their desired income.