Contents
- The three types at a glance
- Requirements and evaluation by type
- Procedure, notice and objection deadlines
- FAQ
Under the Act on Special Measures for the Promotion of Venture Businesses, a venture company is confirmed under one of three types — venture investment, R&D, or innovative growth. Every type requires the company to be a small or medium enterprise, and the venture company confirmation certificate is valid for 3 years from the confirmation date. The Act has no separate "pre-venture" type; a company still being founded is evaluated under the innovative growth type. Evaluation content and result deadlines differ, so choosing the right type comes first.
For what happens after expiry, see our venture and Inno-Biz guide; for tax support after confirmation, see venture company tax benefits; for the research institute needed for the R&D type, see our corporate research institute guide.
The three types at a glance
All three types require SME status under the Framework Act on Small and Medium Enterprises, and businesses in excluded industries set by Presidential Decree, such as general entertainment bars, cannot be venture companies. On top of that, the company must meet one of the following types.
| Item | Venture investment | R&D | Innovative growth |
|---|---|---|---|
| Core requirement | Investment from eligible investors and its share of capital meet the thresholds | Recognized research institute or unit; R&D spending and R&D-to-sales ratio meet the thresholds | Excellent technological innovation and business growth potential |
| What is evaluated | Whether the investment requirement is met | Growth potential (competitiveness, market size and outlook) | Technology, competitiveness, market size and outlook |
| Result deadline | 30 days from the request | 45 days | 45 days |
| Objection decision | 20 days from the objection | 30 days | 30 days |
| Company being founded | No | No | Included |
Requirements and evaluation by type
Venture investment type: investment must come from investors listed in the law, such as venture capital companies and funds, new technology business finance companies and funds, Korea Venture Investment Corp., individual investment associations, accelerators, the Korea Technology Finance Corporation and professional individual investors. Total investment must reach the amount set by the Enforcement Decree, and its share of capital must be at least 10% (7% for a corporation that is a cultural content producer).
R&D type: the company must have a recognized corporate research institute or dedicated R&D department (or a corporate creative research institute or unit). Annual R&D spending must reach the amount set by the Decree, and R&D spending must be at least 5% of annual sales and at least the ratio announced for the industry, calculated over the 4 quarters before the quarter of the request. The sales ratio does not apply to companies within 3 years of founding.
Innovative growth type: no investment or research institute is assumed. The confirmation institution evaluates technological innovation and business growth potential under criteria announced by the Minister of SMEs and Startups.
Procedure, notice and objection deadlines
- Pick the type based on what you already meet: eligible investment points to the investment type, a recognized institute with R&D spending to the R&D type, and otherwise, or if still founding, the innovative growth type.
- Submit the prescribed application with documents proving the requirements to the head of the venture company confirmation institution.
- The institution reviews the documents and may have specialist bodies review them and inspect the site.
- After review by the confirmation committee, the result is notified within 30 days for the investment type and 45 days for the other two, extendable once by up to 20 days.
- If confirmed, a certificate valid for 3 years is issued.
If you disagree, file a written objection within 30 days of the notice. The institution must answer within 30 days (20 days for the investment type), extendable once by up to 15 days. Confirmation obtained by false means must be cancelled, and it may be cancelled after a hearing if requirements are no longer met or there is no business activity for 6 months due to suspension or closure.
FAQ
Q. Can a founder who has not yet incorporated be confirmed?
A. The Act includes companies being founded in the innovative growth type. Detailed methods are set by ministry notice, so check the institution's guidance first.
Q. Does the validity period differ by type?
A. No. The Decree sets 3 years from the confirmation date for all types.
Q. We are in our 2nd year with little revenue. Is the R&D type possible?
A. Within 3 years of founding, the R&D-to-sales ratio does not apply, but the institute recognition and annual R&D spending requirements still do.
Q. Which type fits if we have no research institute?
A. Without eligible investment, consider the innovative growth type. For the R&D type, start with research institute recognition.
Check which venture confirmation type fits before you apply
YouSun Administrative Agency helps with choosing the type, organizing proof documents, preparing the application and objection documents. See our venture confirmation service. Call 02-363-2251, weekdays 09:30~17:30 KST.
Request a consultation