The group says it could distort capital flows, disadvantage deep-tech firms, and push startups toward overseas listings or abandoned IPOs.
There are significant concerns throughout the venture and startup industry regarding the direction for OSDAQ segmentation. (Businesskorea DB)
The venture industry has emphasized that the government’s ‘Direction for Introducing a Promotion/Relegation-style Segmentation to KOSDAQ’ requires meticulous design.
On April 3, the Council of Innovative Venture Organizations (comprising the Korea Venture Business Association, INNOPOLIS Venture Association, Korea Accelerator Association, etc.) stated in an official position paper, “There are significant concerns throughout the venture and startup industry regarding the ‘Direction for Introducing a Promotion/Relegation-style Segmentation to KOSDAQ’.” The council added, “Artificially reorganizing the structure of the KOSDAQ market is more likely to send the wrong signals to the market rather than leading to an enhancement of its fundamental value.”
It further added, “There are concerns that this will be perceived as a policy to artificially reallocate the flow of investment capital rather than a fundamental measure to increase KOSDAQ’s valuation, and as a result, it could lead to controversy over market distortion.”
Concerns were also raised about evaluations based on traditional values. The council stated, “As KOSDAQ is a market where companies with growth potential and innovation raise capital based on their future value, it is not right to approach it solely with a traditional valuation framework centered on short-term performance or size.” It continued, “If this system reform leads to the market perceiving KOSDAQ as a subordinate tier or a preliminary market to KOSPI, it is highly likely to weaken the philosophy and function that the venture capital exit market should possess.”
Furthermore, “If criteria centered on market capitalization or operating performance are placed at the forefront for inclusion in KOSDAQ segments, companies in the bio, AI, semiconductor, and deep-tech sectors, which inevitably require large-scale upfront investment and long-term R&D, will be structurally disadvantaged.” The council sharply criticized, “Even an early-stage Tesla would have been relegated to the ‘second league’ if it had come to KOSDAQ.”
Additionally, the council predicted that this announcement would have a significant impact on the IPO market. “If the structure makes it difficult for newly listed companies to be included in the ‘Premium’ tier immediately after listing, the incentive for domestic listing itself could be weakened,” the council said. “This is highly likely to lower the expectations of companies preparing to go public and, in the long term, lead to an increased preference for overseas listings or to the postponement or abandonment of IPOs.”
The council also emphasized, “Simply being in the ‘Standard’ tier could trigger a rapid outflow of capital, regardless of a company’s intrinsic value.” It stressed, “This could make it difficult for retail investors to make rational investment decisions and, notably, could conflict with the policy direction of expanding the foundation for long-term investment by individuals.”
Kim Eun-jin
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