Venture firms lack funds, survey says

The nation¡¯s venture firms are suffering from severe financial difficulties, a survey recently revealed.

The Federation of Korean Industries announced August 21 that it had conducted a survey of 512 domestic venture firms in June and July jointly with KTB Network. According to the study, 64.5%, or 339, of the firms surveyed complained of shortages of funds.

As a method to satisfy financial needs, venture firms preferred capital injection from venture capital companies (37.3%); support by public funds (21.7%); borrowing from financial institutions (18.6%); and direct financing through the stock market (14.8%), the report said.

As for a bottleneck in management, 49% cited shortage of funds as the toughest hardship, followed by lack of manpower (23%). Also, difficulties in developing technology (11%) and securing sales channels (10%) were mentioned as severe problems falling heavily on the venture firms.

Asked about difficulties facing them in the process of launching business, 59.6% of respondents complained of trouble in raising funds. Also, many firms pointed out difficulty in securing sales channels (29.7%); insufficient information of skilled manpower (19.5%); facilities and equipment (17.2%); and complicated procedures to get government approval for business (10.5%).

With regard to the manpower problem, most venture firms complained of lack of research- and technology-related manpower (53.1%), insufficient marketing and sales persons (18.9%), shortage in technical and production workers (10.5%) and lack of accounting and fund-management personnel (4.7%).

Despite the financial and manpower problems, however, a considerable number of venture firms were taking an optimistic view regarding future business prospects, with 44.9% responding that this year¡¯s revenues would see a year-on-year gain of more than 100%. Also, the number of respondents that expect net profits this year to post more than 100% growth year-on-year reached 35.4%.

In addition, 83.6% replied that they would retrieve their investments by being listed on the Kosdaq market.

Meanwhile, the venture firms¡¯ average number of employees was reported as 35.8, and the number of venture firms with more than 100 employees reached 36.

By industry, the largest number of venture firms were engaged in the software and Internet businesses (19.5%), followed by electric-electronics (18.2%), information-communications (17.6%), manufacturing (14.3%), and machinery (12.5%).

Lee Byong-Ki eye@donga.com