S. Korea On The Way To Legalize Equity Crowdfunding

South Korea planned to legalize the crowd funding system as part of efforts to help venture companies finance their seed money from a number of small investors with fewer restrictions, the Finance Ministry said Wednesday.

Regulations for the crowd funding, including business requirements, investment ceiling and investor protection, will be introduced, the Ministry of Strategy and Finance said in a joint statement with related ministries.

The crowd funding, which began to gain attention after the U.S. legalized such system at the JOBS Act in April 2012, refers to the funding of a company by selling small amounts of equity to a wide pool of investors via the Internet.

The ministry said that the crowd funding will help venture companies fund their seed money from a wide pool of small investors through online funding platform, saying that it will ease posting regulations over such funding.

Angel investors, who inject seed money into small startups or provide ongoing financial support for the growth startup companies, will receive more tax benefits to ease burden for their investment risks, the ministry said.

Those measures came amid concerns that lack of funding has blocked startups of small businesses with creative and high technologies. Angel investors, who tend to inject money into growth startup companies, usually those of less than three business years, account for only 2 percent of the total venture investment in South Korea, while the figure in the U.S. reaches nearly 80 percent, the ministry said. Source: CRIENGLISH