Industrial Bank of Korea provides Silicon Valley-style financing for startups

Industrial Bank of Korea (IBK) on Friday launched the IBK Venture Loan, which provides bridge loans to promising startups struggling to borrow funds due to lack of financial performance and collateral until they attract investment.

IBK, a government-run bank to assist small and medium businesses, modified and supplemented the venture loan system of Silicon Valley in the US for the Korean corporate environment. The financial product offers low-interest loans to promising startups that have received investment from venture investment institutions and allows lending banks to share any corporate gains later through bonds with warrant.

In April this year, IBK Chief Executive Officer Yoon Jong-won visited the US for talks on venture financing know-how and innovative financial techniques with the Santa Clara, California-based Silicon Valley Bank. IBK said this is the first time for such skills and techniques to be adopted in Korea.

An IBK source said, "Because many startups are struggling with financial difficulty due to recent economic jitters both at home and abroad as seen through interest rate hikes, our bank through the IBK Venture Loan will actively support innovative new businesses to help them overcome 'Death Valley' and see sustainable growth."

Write to Bo-Hyung Kim at kph21c@hankyung.com