This study describes the structure of the capital markets for small- and medium-sized enterprises (SMEs) and startup companies in Korea, which is an emerging market that has experienced drastic changes. The overall capital market can be divided into private and public capital markets. In the private capital market, most of the demand for capital comes from non-listed private firms, including startups and SMEs. In the case of SMEs and startups, the KOSDAQ, the Korea New Exchange (KONEX), and primary collateralized bond obligations (P-CBOs) are part of the public capital market. SMEs and startups are generally incapable of raising sufficient capital owing to their low credit ratings, and they largely have limited access to primary markets to issue shares and borrow money. The Korean government has developed a systematic financial aid program to provide funds to these companies. The fund for SMEs has significantly contributed to the development of the venture capital market. Many Korean banks provide substantial lending to SMEs, but this lending is available only because of the Korean government’s loan recovery guarantee. Furthermore, SMEs can issue corporate debt in the form of primary collateralized bond obligations through government guarantees, but such debt issuances have placed increasing pressure on public guarantee institutions.

Abstract
 1. Introduction
 2. Outline of Capital Markets of SMEs and Startups in Korea
 3. Private Capital Markets and Government Support for SMEs and Startups in Korea
 4. Public Capital Markets for SMEs and Startups in Korea
  4.1. Stock Market Listing Requirements
  4.2. KOSDAQ
  4.3. KONEX
  4.4. P-CBO Market
 5. Concluding Remarks
 References
 Endnotes

• Ki Beom BINH(Department of Economics, Myongji University, Seoul, Korea.)
• Hogyu JHANG(School of Business, Chungnam National University, Daejeon, Korea.)
• Daehyeon PARK(College of Economics, Sungkyunkwan University, Seoul, Korea.)
• Doojin RYU(College of Economics, Sungkyunkwan University, Seoul, Korea) Corresponding Author