Corporate Korea has wondered how the Park Geun-hye administration will turn its rather abstract goal of a “creative economy” into reality. The government came up with an answer Wednesday: by creating a “second venture boom.”
The direction itself is right. What else could it be?
So are the contents of the new policy package, with the lengthy title of “Plan for realizing a virtuous cycle of funding ecosystem for ventures and start-up companies,” evolved from 15 years ago.
The new plan, for instance, encourages potential financiers to make investments in start-up firms rather than extending loans to them, by providing various tax incentives. It also shifts the focus of policy support from the stage of corporate launching to those of disinvestment or reinvestment.
In short, the latest plan calls for taking better care of young, promising firms from birth to death, the venture version of “from cradle to grave.”
So far, so good. As always, however, the devil lies in implementing this in the field. Especially so in Korea, where the industry remains mired in the nightmare of the first venture boom that went up in smoke, leaving a host of adverse effects in its wake. Which points to the need for reviewing what’s gone wrong in the late 1990s so as to not repeat the same mistakes.
In retrospect, the biggest problem back then was a total lack of follow-up monitoring of everything, from the chase of support funds to corporate practices. There were a number of pseudo-venture firms that applied for and took funds but closed business soon afterwards. So much so that there was a saying among the industry that those who fail to receive one support fund or another are fools.
On the other hand, many “real” venture companies suffered from heavy-handed bureaucrats and large businesses, which took away hard-won technologies, patents and manpower without paying due prices.
At the end of the day, bad money drove out good to create a huge “venture bubble,” ending with more than a few venture entrepreneurs in prison either for fraud or financial failure, and driving a number of investors to bankruptcy or even suicide.
Few can say all this will not repeat itself this time around ― without close monitoring by a government-civilian joint panel under the direct supervision of the president, given the limitation of the bureaucrat-oriented system.
Most importantly, Park should not be in haste to produce quick results. This, and most other long-term projects for that matter, requires time to create a suitable environment, including honest corporate practices and a creativity-oriented business and education system.
Park must believe she is only sowing the seed, and may not be able to see its fruits, or even flowers, before her days in office end. Otherwise, haste will produce more waste and the nightmare will repeat itself.