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SBC Pushing for Innovation Valley for Venture Firms, Startups
A Korean-type Silicon Valley
SBC Pushing for Innovation Valley for Venture Firms, Startups
  • By Cho Jin-young
  • April 23, 2018, 11:52
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Lee Sang-jik, president of the Small and medium Business Corporation (SBC), disclosed a plan to develop a Korean-type innovation valley at a press meeting on April 20.
Lee Sang-jik, president of the Small and medium Business Corporation (SBC), disclosed a plan to develop a Korean-type innovation valley at a press meeting on April 20.

The Small and Medium Business Corporation (SBC) is planning to build a Korean-type Silicon Valley in Mok-dong, Seoul, to provide one-stop service to promising venture firms and start-ups. In addition, the SBC is planning on a P-CBO project utilizing package financing for unicorn startup growth.

“There is a reservoir close to the SBC headquarters in Seoul. I think we can create an innovation valley like Silicon Valley in the US,” said Lee Sang-jik, president of the SBC, at a press meeting on April 20.

Lee envisions a space that can provide startups and venture firms with all the services they need, ranging from training and financing to overseas market penetration, design, consulting and R&D. The SBC is going to provide the services by gathering startups and venture firms in that place along with startup supporters such as the Korea Venture Investment Corporation and the Korea Small Business Institute.

In the same context, the SBC is going to increase the number of its Youth Entrepreneurship Academies (YEAs) from five to 17 so that YEA graduates can make use of the valley in launching their own businesses.

The P-CBO project is to enable venture firms to attract large funds for facility investment and for other purposes not via financial institutions but directly from capital markets. This method requires the SBC to provide credit enhancement to corporate bonds issued by venture firms and convert the bonds into high-grade ABS for sale to investors. 

P-CBO allows venture companies to secure large funds on a three-year fixed interest rate without relying on a financial institution. According to the SBC, the multiplier effect of the P-CBO financing is about 22 times that of loans and other financing methods because the former entails less fiscal expenses and shorter recovery periods.

Also, the SBC is planning to provide more financial support for smart factory introduction so the number of innovative manufacturers in South Korea can reach 20,000 in or before 2022. “According to a survey, a smart factory increases the number of jobs by 2.2, sales by 20% to 30%, and profits by approximately 50% for each company adopting it,” SBC President Lee Sang-jik explained, adding, “We will help companies increase their production and employment by means of smart factory systems.”