KOREAN GOVT URGED TO ALLOW STARTUPS ACCESS TO R&D FUNDS.

SEOUL, Aug 1 Asia Pulse - Investor confidence in venture startups has collapsed so rapidly since the outbreak of a series of scandals involving venture businesspeople that newcomers are having difficulties getting funds for new businesses.

The falling New Economy, which has buttressed the U.S. economy with the information technology revolution for the past decade, added to the uncertainties surrounding the outlook for the country's export-oriented IT venture startups.

Both state-run and private venture capitals are staying away from actively putting their money into firms citing lack of confidence in the business outlook - even though they were launched to incubate budding IT firms. These in turn were supposed to replace the time-honored tradition of focusing on large-scale manufacturing firms.

"How come you disregard the fact that Korea overtook Japan in the IT and internet industries for the past years with the help of the explosive development of the venture startups ?" said President Jeon Sung-yong of Zionet which specializes in data protection service and solutions.

Jeon called for the Kim Dae-jung administration to return to the spirit of 1998 when it aggressively launched an ambitious venture-incubating project at the start of its tenure. This was a way to help the country overcome the financial crisis through creation of more jobs and production of high value-added IT goods to compensate for the sluggish traditional manufacturing industries.

"Japan is now moving quickly to help establish IT and internet startups so they could help the Japanese economy pick up," Jeon said.

Jeon said the role of venture firms in trying to find niche markets left over by large corporations through intensive R&D activities should not be neglected.