The financial difficulties of venture companies are deepening due to the reduction of government subsidies and tight monetary policy. Venture capital investment plunged 40.1% in the third quarter of this year compared to the same period last year. There are growing calls in the business community for improvement in financing, such as strengthening policy financing and expanding unsecured loans.

According to a report released by the SGI of the Korea Chamber of Commerce and Industry on the 14th, the financial difficulties of venture companies are deepening due to the reduction of government subsidies and tight monetary policy. In fact, the government’s policy funds and fund-raising budgets for next year will fall 19.6% and 39.7%, respectively, and the amount of funding has been decreasing for the second consecutive year.

In particular, venture companies are often in a state of chronic excess demand for external funds, so if the supply of funds decreases, the financial difficulties will worsen rapidly. Venture capital investment plunged 40.1% year-on-year in the third quarter of this year as investor sentiment shrank due to economic uncertainties and high interest rates. As a result, SGI suggested that △ policy finance’s economic retrograde operation to ease financial difficulties of venture companies △ expanded supply of unsecured loans to venture companies △ deregulation to revitalize corporate venture capital (CVC).

“Private investment funds in venture companies such as bank loans and venture capital have been evaluated as worsening financial difficulties in the face of the economic slowdown due to strong economic compliance,” said Kim Kyung-hoon, a researcher at SGI. He also pointed out that the supply of unsecured loans to venture companies that lack collateral should be expanded to support the distribution of funds for venture companies in the early stages of their start-ups.