President Park Geun-hye marked her first anniversary in office on Feb. 25 by unveiling her new economic vision and a three-year reform blueprint geared toward it.

Park’s new vision is dubbed the “474 plan.” During her term, she hopes to raise the nation’s potential growth rate back to the 4 percent range, ratchet up its employment rate to 70 percent and boost its per-capita income beyond $30,000 toward $40,000.

The three-year plan enumerated a host of action plans to realize Park’s vision. Yet the centerpiece was a set of measures aimed at strengthening the still frail venture ecosystem.

Park said the government would invest 4 trillion won for the coming three years to foster prospective venture entrepreneurs, expand start-up infrastructure, increase support for promising venture firms and help failed entrepreneurs make a comeback.

Separate from the investment plan, the government will set up a 760 billion won fund specifically focused on supporting young entrepreneurs under 40 and stimulating angel investment.

It also plans to create a Korean version of Israel’s Yozma funds to get foreign venture capital companies involved in helping Korean venture firms list their shares on foreign stock exchanges.

These are the latest in a long series of initiatives the government has introduced since its inauguration a year ago to create a second venture boom. The rationale for this campaign is that venture companies are the main engine that can pull the Korean economy from a low-growth trap.

Last year, the government went to great lengths to create a venture ecosystem that could provide support to venture companies tailored to their stage of development. It sought to put in operation a virtuous circle of start-up, growth, exit and reinvestment.

To address financing difficulties of start-up companies, the government sharply increased its own funding and set up matching funds to facilitate investment by first-generation venture entrepreneurs, angel investors and the general public.

To provide exit channels other than initial public offerings to investors, the government simplified regulations on mergers and acquisitions of venture companies and introduced tax benefits for both buyers and sellers.

It also strengthened the independence of the tech-heavy KOSDAQ market to relax the listing requirements for venture firms, while at the same time establishing a new stock market, the Konex, to help innovative start-ups access capital more easily.

The government also eased regulations on stock options to help start-ups recruit talented workers more easily.

These and other efforts provided a significant boost to the venture industry. The number of venture companies hit 29,192 in October, a record high and up about 1,000 from December 2012.

Fund-raising for venture investment was brisk. The amount of public and private investment funds newly created last year reached 1.54 trillion won, double the 770 billion won in 2012.

Of it, 1.38 trillion won was actually invested in venture firms, a new high since 2001 and up 12.3 percent from 1.23 trillion won in 2012.

The number of angel investors also grew sharply, with 4,810 investors registered with the Angel investment Support Center last year, up 84.2 percent from 2012.

Venture M&A and IPO activity also increased. A total of 131 venture M&A deals were clinched last year, up about 60 percent from 82 in 2012. And 37 venture firms conducted IPOs on the KOSDAQ, up from 21 in 2012.

The number of companies listed on the KONEX also increased from the initial 21 in July to 46 in December, with their market capitalization doubling during the period.

Foreign investors’ interest in Korean venture companies also increased. Last year, the government managed to attract about $200 million from U.S. venture capital companies, of which $42.6 million was invested in 19 local start-ups.

This year, the government plans to set up another $100 million investment fund by attracting funds from foreign countries, including the United States and China.

These and other signs of improvement have led some to expect a second venture boom this year, more than a decade after the first one ended in the early 2000s amid the dotcom bubble burst.

Yet such expectations still seem to be premature. The recent surge in venture investment is largely the result of an increase in government funding. Fresh investment by private venture capital companies has continued to grow since 2009 but at a slow pace.

The number of venture capital companies actually decreased from 128 in 2002 to 102 last year, with their aggregate paid-in capital dropping from about 2 trillion won to 1.4 trillion won during the period.

Despite increased funding support for start-ups, there has been no big surge in start-up activity yet, making government officials impatient. This suggests that the barriers to business start-up still remain high here.

One such barrier is the widespread negative perceptions about start-ups. A recent survey conducted by the Korea Foundation for the Advancement of Science and Creativity has found that 72.6 percent of Koreans think launching a business is undesirable so one should give it a second thought. The figure is much higher than 40.8 percent in China and 55 percent in Japan.

When asked what they would do if a family member planned to start a business, 36.7 percent of Koreans said they would advise them to think twice or talk them out of going ahead with their plan. The comparable figures were 10.4 percent in China and 23.4 percent in Japan.

These negative perceptions stem largely from the low survival rate of start-ups and the high price that failed entrepreneurs have to pay. The OECD Science, Technology and Industry Scoreboard 2013 shows that the first-year survival rate of new firms born in 2006 was 62 percent in Korea, the lowest among the 17 surveyed countries. For companies with three years of activity, Korea also ranked lowest with 41 percent.

The steep price of failure may be a more powerful deterrent. Some failed businessmen still have to dispose of all their assets ― sometimes even those of their family members and relatives ― to repay corporate debt. This increases fear of failure and makes it difficult for failed entrepreneurs to bounce back.

Last year, the government did take measures to make business failures costly for entrepreneurs. Previously, it provided financial support to start-ups in the form of extending loans. To reduce the burden of failure, it shifted to making investment in them.

It also expanded the scope of entrepreneurs eligible for exemption from joint liability when they have take out loans from banks after using up their start-up funds.

The fear of failure will be eased when the virtuous cycle of start-up, growth, exit and restart run smoothly in the venture ecosystem. For this to happen, however, many things still need to be done.

For instance, large corporations should be encouraged to purchase local venture firms as a means of acquiring new technologies. To facilitate venture M&As by big companies, the relevant regulations need to be softened.

To lower the barriers to start-up, Korea also needs big success stories. Currently, there are few role models in Korea that can inspire prospective young entrepreneurs. Korea needs its answer to Bill Gates, Steve Jobs and Mark Zuckerberg. To create success stories, it needs to attract more foreign investors.

By Yu Kun-ha

Yu Kun-ha is chief editorial writer of The Korea Herald. He can be reached at khyu@heraldcorp.com. ― Ed.