A person preparing to launch a startup recently received an unusual offer from a venture capital firm. The firm demanded an upfront payment of 15 million won, claiming it could guarantee acceptance into TIPS, a program under which private investors identify and recommend promising startups for government research and development funding. The would-be founder filed a complaint over the company’s demand for a large sum, saying it pitched government program acceptance in a manner resembling insurance sales.
As government support for startups expands, founders are voicing growing frustration over complicated administrative procedures, the way support programs are run and brokers who claim access to policy funds.
The Anti-Corruption and Civil Rights Commission released an analysis on the 21st of 2,184 startup-related complaints filed with its complaint information analysis system between August of last year and July of this year. From January to July of this year, startup-related complaints averaged 217 a month, up 36.5% from 159 between August and December last year.
Cases in which founders were asked for money in exchange for promised access to government policy funds or selection for support programs were particularly common. One complaint described a company that demanded a 300,000-won retainer plus a fee equal to 5% of the approved amount in return for help securing policy funding. Another involved a firm that charged several million won to write business plans while advertising that it “conducts reviews for government support.”
Many complaints also said the startup process itself is too complex. Information and application channels for licensing, taxes and patents are scattered across different agencies, and required procedures vary by industry, making it difficult for prospective founders to find what they need in one place. Others called for improvements to eligibility requirements, selection and review processes, and operating standards for support programs.
On policy funds, complaints centered on the criteria used to select recipients and to review loans and guarantees. Many said they could not obtain funding in practice because they were pre-launch or repeat founders, or because of the particular nature of their industry.
The commission sent the findings to related agencies including the Ministry of SMEs and Startups, the Ministry of Agriculture, Food and Rural Affairs, the Ministry of Food and Drug Safety and the Korea Institute of Startup and Entrepreneurship Development. “Startup-related complaints reflect the practical difficulties people face in navigating administrative procedures and support systems as they begin a new challenge,” Commission Chairperson Chung Il-yeon said. “We will work actively to ensure that voices from the field lead to better startup policy.”
#KoreaStartups#TIPS#PolicyFunds#StartupSupport#AntiCorruption
Original reporting by Kim Yu-seung for Seoul Economic Daily.
AI-translated from Korean. Quotes from foreign sources are based on Korean-language reports and may not reflect exact original wording.
View Korean originalTranslation Policy
Most Read This Week
- 1Court Rejects 100 Million Won Suit Against Min Hee-jin Over ILLIT Plagiarism Claims
- 2China’s UBTECH Opens Plant Making a Humanoid Robot Every 10 Minutes
- 3KOSPI Opens 2.54% Higher at 6,885.70
- 4Amazon Bets on Hollow Core Fiber to Keep a Million Chips in Sync
- 5Musk Accelerates Tesla’s Robot Gigafactory for Optimus
