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Korean Venture Firms' Sources of Capital

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  • Ahn, Sohyun

    (Korea Institute for Industrial Economics and Trade)

Abstract

Financing decisions are some of the most important decisions firms make. Many scholars have focused on studying the mechanism behind these decisions, and comparing the outcomes of different sources of capital. Studies have found that firms’ financial decisions interact with other business decisions, such as investment decisions. Moreover, different sources of capital affect other players in the market differently, through which firms’ financing decisions affect the overall structure of the economy. This article examines the relationship between financing and other firm characteristics to shed light on firms’ strategies and performance in Korea. Korean venture firms’ unique characteristics may affect their business strategies and performance. In this article, I analyze the characteristic of venture firms by focusing on their financing decisions. Specifically, I categorize and define venture firms by the sources of capital utilized and compare their characteristics and performance using survey data from 2021. Keywords: venture firms, venture capital, venture financing, small and medium-sized enterprises, SMEs, capital financing, financing decisions, equity financing, debt financing, imperfect information, imformation asymmetry, angel investment, Korea, innovation policy

Suggested Citation

  • Ahn, Sohyun, 2023. "Korean Venture Firms' Sources of Capital," Industrial Economic Review 23-8, Korea Institute for Industrial Economics and Trade.
    • Handle: RePEc:ris:kieter:2023_008
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    More about this item

    Keywords

    venture firms; venture capital; venture financing; small and medium-sized enterprises; SMEs; capital financing; financing decisions; equity financing; debt financing; imperfect information; imformation asymmetry; angel investment; Korea; innovation policy;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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