South Korea’s impact investing scene is facing a call for a standardized tool to measure the social impact a startup generates via its business, as the demand to address social challenges is on the rise and more young entrepreneurs are looking to take on the challenges.

Such a tool is key to leveraging social ventures’ impact and sustaining their solution for international problems in the long run, in order to assure investors that their investment goes to the right social ventures, said Cho Su-hyung, youth policy and partnerships consultant at the United Nations Development Program in a virtual fireside chat Wednesday evening.

“It is really important to implement some standard on measuring and monitoring the impact,” Cho said.

“I’m also keen on doing the research on how Korea could apply or develop a certain impact measurement standard so that (social impact) could become more mainstream.”

Cho was one of the speakers in the event dubbed “Impact Investment in Korea,” hosted by Seoul Startups.

This comes against the backdrop of Korea’s fledgling impact investing scene. The public sector is said to have largely driven impact investing activities in Korea, while the nation has yet to introduce a legal framework to define and nurture social ventures.

Nevertheless, social ventures are becoming mainstream, as the demand for collaboration with Korean social ventures is growing up at home and abroad.

Speakers in the virtual event said countries in Asia-Pacific are looking for connections with Korean social ventures, while corporations in Korea are increasingly teaming up with social ventures to achieve open innovation and tackle climate change.

“I believe impact startups (in Korea) will have much more opportunities from now on,” said Anna Kang, senior consultant at Seoul-based impact investor Merry Year Social Company.

Korea is home to some 1,500 social ventures as of August 2020, according to an estimate from the Ministry of SMEs and Startups. Among them, some 139 companies have raised an accumulated 523.3 billion won ($467.6 million) funding until 2020.

The ruling Democratic Party has proposed a revision to the Act on Special Measures for the Promotion of Venture Businesses in October 2020, in order to lay out a clearer legal grounds for social ventures.

By Son Ji-hyoung (consnow@heraldcorp.com)