Korea Startup Forum Releases Position Statement

The recent conflict over investment agreements involving HYBE and its subsidiary is a serious case that could severely undermine the principles of trust and responsibility, which form the foundation of the investment ecosystem.

The Korea Startup Forum (hereinafter “KSF”) expresses deep concern that this situation could compromise the legal stability of the investment environment and threaten the very foundation of the startup ecosystem, and hereby issues the following statement.

An investment agreement is a legally binding promise based on mutual trust. It goes beyond mere financial contribution and has the nature of a joint venture that combines intangible assets such as opportunity costs, time, and shared vision. Furthermore, investment agreements protect the assets and rights of a business and serve as an important foundation for promoting growth between investors and investees. However, if the interpretation and performance of contracts are unilaterally nullified, this will undermine the essence of investment decisions and cause irreparable distrust throughout the investment ecosystem.

In particular, the erosion of social trust in the performance of investment agreements severely dampens investor sentiment and has a devastating impact on the entire ecosystem. Investment agreements must be interpreted and performed in a manner that protects investors’ reasonable and sound expectations, and healthy investment can only be achieved when an environment that does not undermine social trust is stably maintained. Cases of unilateral contract nullification sharply diminish investors’ willingness to invest, and this can extend beyond individual contract issues to a decline in trust in the entire Korean startup ecosystem. If foreign investors’ trust in the Korean market is damaged, global investment attraction will shrink, limiting growth opportunities for domestic startups, which will ultimately lead to a weakening of the competitiveness of Korea’s startup ecosystem.

It is true that since this incident, investor sentiment toward the entertainment industry has sharply contracted. It is truly unfortunate that this has happened at such a critical time when K-pop is expanding globally.

The Korea Startup Forum emphasizes that this case has reaffirmed the importance of the essence and principles of investment agreements and social trust, and expresses deep concern that the sound development of the startup industry and the investment environment could be severely impaired. The faithful performance of investment agreements, fair interpretation according to legal principles, and respect for judicial decisions are core principles that ensure the long-term interests of all market participants. KSF strongly urges the restoration of social trust and the establishment of fair norms, and will continue active discussions and cooperation to create an environment where startups and investors can grow together.