By Kim Bo-eun
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| Korea Technology Finance Corp. Chairman Jeong Yoon-mo |
The quasi-government agency, currently led by Chairman Jeong Yoon-mo, has provided assistance to more than 90 percent of the 572 domestic venture companies that generate more than 100 billion won ($88.38 million) in sales a year.
It has fostered four out of six "unicorn companies" which are unlisted startups that are valued over $1 billion, including Viva Republica, operator of the mobile payment app Toss, which is ready to set up an internet-only bank.
The number of firms receiving credit guarantee services from the agency has continued to grow. In 2018, the figure stood at 78,244, up from 74,591 in 2017 and 71,285 in 2016.
KOTEC was established in 1989 to finance technologically viable but credit-constrained SMEs, as a means to promote these firms' development of technology. Since its establishment, it has provided credit guarantees worth a total of 345 trillion won.
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| KOTEC headquarters in Busan / Courtesy of KOTEC |
Supporting innovative SMEs
With a well-established credit guarantee scheme, KOTEC devised technology rating services to better serve its innovative SME clients.
In 1997, it opened the nation's first technology appraisal center, to enable credit guarantees based on a firm's potential, rather than current financial circumstances of the company.
In 2005, KOTEC developed its own technology appraisal system called Kibo Technology Rating System (KTRS). All credit guarantees are now provided based on technology ratings.
The system assesses commercial viability and associated risks of technology projects to better determine the value of intangible assets owned by SME clients.
KOTEC, based in Busan, has established a system that enables technology appraisals nationwide. The Central Technology Appraisal Institute plays a central role.
Out of 1,300 employees, around 950 are involved in technology rating, including 240 with PhDs.
They had conducted a total of 667,404 technology appraisals by the end of 2018.
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Exporting KTRS
KOTEC has become a leading technology finance institution in Korea and its KTRS earned world-wide recognition as one of the best practices in financing innovative SMEs.
Since 2013, KOTEC has been exporting its system to developing economies as well as to the European Commission.
As part of the Ministry of Strategy and Finance's Knowledge Sharing Program, KOTEC has been transferring know-how on establishing a technology rating system for SMEs to Vietnam and Thailand.
Under a memorandum of understanding (MOU) signed with Vietnam's State Agency of Technology Innovation (SATI) in 2013, KOTEC trained visiting employees of SATI about its technology rating system.
In 2015, KOTEC conducted a project with Thailand on transferring its technology rating and credit guarantee system.
In 2017, KOTEC worked with the government of Peru on developing the latter's technology rating system, and advised on its credit guarantee policies.
The agency's system also received attention from developed economies.
In 2013, the Japan Finance Corporation visited KOTEC to learn about KTRS.
In 2015, Spring Singapore, which was a statutory board on standards, productivity and innovation under the country's trade and industry ministry, as well as Singapore's three major banks ― Development Bank of Singapore, Oversea-Chinese Banking Corporation and the United Overseas Bank Limited ― learnt about KOTEC's systems.
In 2012, KOTEC's technology rating system also earned recognition from Europe, with its INNO-Partnering Forum (IPF) introducing the system as a "good practice" in a report submitted to the European Commission.
In the same year, KOTEC was invited to make a keynote speech at an IPF general meeting in Brussels.
KOTEC was the only Asian institution to speak at EuroSME 2013, a high-level EU conference. Visits to KOTEC from institutions assisting technological innovation in France and the Netherlands followed.
In 2016, the EC requested the EU implement KOTEC's technology rating system. In 2017, KOTEC completed developing a model which could be applied to companies within Europe and the agency became the first Korean financial institution to sign a memorandum of understanding with the European Investment Bank (EIB) on assisting innovative SMEs and on cooperation on technology appraisal.
In a 2018 EIB report, the KTRS was referred to as a "global best practice" and was included in the EC's three-year R&D project, which began this year.
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