Startup Studio: Key to Startup Ecosystem Growth, Urgent Legal Reform

On March 7th, the 'Startup Studio Revitalization Policy Forum,' held at the National Assembly Members' Office Building, served as an important platform to dissect the institutional constraints hindering the development of the domestic early-stage investment ecosystem and to explore ways to vitalize the innovative 'Startup Studio (Company Building)' model. Hosted by National Assembly members Han Jun-ho and Kim Dong-a of the Democratic Party of Korea, and organized by the Korea Early-Stage Investment Accelerator Association (KAIA), the event drew keen interest from venture investment industry stakeholders, focusing on discussing the negative impact of strict activity restrictions on startup accelerators (company builders) under the current Venture Investment Promotion Act on the operation of startup studios. Won Dae-ro, CEO of Wilt Venture Builder, emphasized in his presentation, 'Startup Studio Global Trends,' that startup studios with co-founding operation platforms are a global trend. He pointed out that while negative regulatory systems like Singapore's enable the free growth of startup studios, Korea's rigid legal restrictions hinder the emergence of innovative models. He also asserted that in the current venture investment market, where early-stage investment is contracting, startup studios can provide new opportunities for both venture capitalists (VCs) and accelerators (ACs). Lee Yong-kwan, CEO of Bluepoint Partners, addressed structural problems in the domestic startup ecosystem in his presentation, 'K-Startup Studio Operations and Current State.' He shared his experience of introducing a startup studio model to support technology-based startups, aiming to overcome the low startup rate despite the abundant master's and Ph.D.-level talent in the Daejeon region. However, he revealed the reality that due to current regulations, accelerator subsidiaries were subject to activity restrictions, forcing the closure and merger of entities like 'Startingpoint' and 'Ourspot,' strongly advocating for the necessity of improving unreasonable regulations. During the panel discussion, a flood of criticism and demands for improvement regarding these regulatory realities emerged. Jeon Hwa-sung, KAIA Chairman (CEO of CNTTech), warned that accelerators face regulations in various investment activities and that the startup studio model risks being considered an illegal activity under current laws. He expressed regret that good talent and business ideas cannot be vitalized due to regulations, explaining through Bluepoint's case how regulations restrict the potential of successful company building models. Kang Ji-ho, CEO of Antler Korea, emphasized the essential role of startup studios in reducing trial and error for early-stage founders and accelerating market adaptation, using Antler's case to stress the importance of founders' intrinsic motivation and problem-solving abilities. The panelists also agreed on the importance of creating an ecosystem where domestic founders positively embrace the startup studio model and subsequent investments can flow smoothly. They noted that various attempts are actively underway overseas, with specialized investment firms emerging solely to invest in startup studio portfolios, implying that Korea's regulatory environment is not keeping pace with global trends. In conclusion, this forum clearly highlighted the urgent need for the deregulation of existing accelerators and support for follow-up investments to vitalize the domestic startup studio model. Jeon Hwa-sung, KAIA Chairman, strongly urged that "for the sustainable growth of the domestic startup ecosystem, the startup studio model must be permitted, and legal and institutional improvements for this are absolutely necessary," expressing hope that the discussions from this forum would lead to actual policy changes.