The Korean venture capital market has grown dramatically in recent years, starting from a negligible base
in the early 1990s and almost tripling between 1998 and 2001. Korea now ranks among the leading OECD
countries in venture capital investment as a share of GDP. Korea weathered the severe financial crisis of
1997-98 to face the challenge of reducing the influence of large corporations (the chaebol) and augmenting
the role of technology-oriented small firms. The government jump-started the venture capital market in
1998 through direct infusion of equity capital, generous tax incentives and equity guarantees, and the
designation of certain small firms as “venture businesses”. Concerns relate to the need to further privatise
the venture capital system and to increase the supply of investment-ready small firms. This paper analyses
trends in Korean venture capital markets and makes policy recommendations which have been developed
through an OECD peer review process.