Reasons for Proposal
The current law requires startup planners (accelerators) to find and invest in early founders (startups) and provide comprehensive incubation services such as business space, mentoring, and management programs so as to provide support for cultivating startups to lead the way for the Fourth Industrial Revolution.
However, the startup planners are allowed to identify detailed information, including the business model, business history, financial situation such as capital, personal information in relation to the founder, and future development plans during the investment assessment of startups, but startups are unable to identify the ownership percentage, anticipated amount of investment, and the previous startup incubation performance required for the startup planners, giving rise to information asymmetry.
On the other hand, leading overseas startup planners such as Y-Combinator (average stake of 7%, average investment of USD 120,000) and AngelPad (average stake of 7%, average investment of USD 120,000) are required to disclose their required stake and amount of investment before selecting a startup, and thus contracts are concluded based on mutual trust.
Therefore, the Amendment aims to require the startup planners to include the average equity acquisition rate and average amount of investment, and incubation performances for each early founder in the information announced so as to provide information to startups to distinguish outstanding startup planners (Article 32 (1) 5 and 6 newly inserted)
Major Provisions
Article 32
