Recently the government announced that new technology evaluation system to be installed to bolster capital lending to venture companies who own promising technology. It is also known as ‘Innovation Financing’. Innovation Financing is the term referred to financing (either lending or investment) during the entire technological innovation process. Technological innovation must be based on unique ideas and ‘commercially workable’ technology. Mostly innovation financing is provided in two ways: capital investment (equity) from venture capitalist and general lending practice by banks. The government not only provides a guarantee payment for the lending in case a company fails to repay the debt, but also infuses capitals with venture capital fund as indirect support.
It is believed that incoming technology review system based on credible assessment should facilitate innovation financing activities more efficiently. As financing shall be implemented based on credible technology evaluation report by TCB(Tech Credit Bureau), potential risk of financing is expect to be mitigated while more innovation financing is to be made.
In order to proceed, the government proposed the following items:
1) Establish TDB(Tech Data Base) system
2) Reinvigorate TCB(Tech Credit Bureau)
3) Enhance technology credit assessment capability
4) Utilize tech credit reports for financing activity in wide
Currently, the information on technology evaluation data is scattered in each assessment agencies; which is difficult to aggregate and access data as a consolidated data base at any time. Since it costs more time and expense to retrieve all data and information, aggregated TDB is necessary to be established to access. To enhance credit review capability and share TDB, more credible reviewers should be needed as well. Private credit evaluators, such as corporate credit rating agencies, accounting firms, patent & law firms are expected to deal with this work along with current reviewers.
Based on credit report by TCB members, it is expected that banks will improve lending practice in terms of more reasonably credible basis. It goes without saying that more technology-equipped venture companies should be able to access financing resources.
The government expects that innovation financing should be increased for tech-based SMEs and venture companies once technology review system works properly. Venture companies and SMEs funded by innovation financing will create commercially-driven business as well as employment and eventually contribute to the overall economic growth by realizing creative economy.
Jin Mok Kim