Korean financial companies that have emerged as ‘big hands’ for startups are speeding up their direct investment

Establishment of FinTech ecosystem led by financial companies is speeding up in South Korea. As direct investment by financial companies is being made through startup incubation programs, the focus of the startup and venture businesses is on building a startup ecosystem led by financial groups. The financial group, which had been working with venture capitalists to collect seed money, is drawing attention from the industry as it has dualized its direction into direct investment.

According to the related industries report on April 21st, direct investment by major financial groups and financial institutions, including Shinhan Financial Group, KB Financial Group, Woori Financial Group, NH Nonghyup Bank and IBK Industrial Bank, are speeding up efforts to nurture FinTech. Financial companies, which have been supporting offices, supporting overseas advancement through FinTech incubation programs, and connecting domestic and external investment firms are striving to establish an ecosystem of closer ties fostered by investing in startups themselves.

Shinhan Financial Group will further strengthen its investment through Shinhan Future’s Lab, which was established in 2015. Shinhan Financial Group has announced its strategy to invest 1.7 trillion won (about US$1.4 billion) in innovative growth projects. Here, Future’s Lab plans to spend 25 billion won (about US$21 million) over five years on nurturing and investing in startups. Since the company is investing 5 billion won (about US$4.2 million) in startups for five years, focusing attention on startups interested in capital and business cooperation.

Woori Bank will expand its “Wibee FinTech Lab” to “Dino Lab” this year and invest about 130 billion won (about US$110 million) this year. The Dino Lab will operate under the existing “Wibee FinTech Lab” and the newly arranged “Developer Lab.” Wibee FinTech Lab supports office space, management consulting and investment, while Developer Lab intensively supports the development of technologies and services for small and medium-sized enterprises. Woori Bank selected 14 companies operating in the Dino Lab through an initial public offering last month.

KEB Hana Bank has decided to actively create and spread a new startup ecosystem by investing over 20 billion won (about US$17 million) in equity for the next three years, attracting 500 billion won (about US$426 million) in direct and indirect investment within 2019, industrial-academic activities with promising startups and local universities, and supporting young startups. In addition, Hana Financial Group will actively support startups that utilize 186 network and global business partners from 24 countries to enter the customized global market.

The Credit Guarantee Fund (CGF) announced on April 9th that it will select 100 leading start-ups and provide financial support such as guarantees and investment. They can receive guarantees and investment from CGF and receive interest rate incentives and fee exemptions from Woori Bank. KOTRA, the Korea International Trade Association and others support startups’ global expansion, while private-specialized accelerator such as venture square helps them to foster their systems. Through its tie-up with venture capital, CGF also drew 20 billion won (about US$17 million) worth of private investment. Depending on the companies’ business performance, they will also provide 30 billion won (about US$25 million) in additional credit guarantees.

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