Propelling Country to 3rd Place in Entrepreneurship Worldwide
The government, in a joint effort with the private sector, is establishing a “Startup Korea Fund” with a total size of 2 trillion won (US$1.51 billion) by 2027 to support the global expansion of deep tech and startups.
The Ministry of SMEs and Startups (MSS) announced the “Comprehensive Startup Korea Plan” during the “Startup Korea Strategic Meeting” presided over by President Yoon Suk-yeol at the Yeongbin-gwan in the Blue House on the morning of Aug. 30. This plan outlines the direction of medium to long-term entrepreneurship policies.
The government has set ambitious goals to achieve by 2027, including nurturing five companies among the world’s top 100 unicorns, which are companies not publicly traded and have a valuation exceeding 1 trillion won. It also seeks to elevate Seoul’s position to 7th in the rankings for startup and venture ecosystems and achieve a venture investment scale of 14.2 trillion won and a local technology-based startup rate of 40 percent. Additionally, it plans to inject 500 billion won in new investments into corporate venture capital (CVC) by holding companies and secure a third-place ranking in the Global Entrepreneurship Index, assessing entrepreneurial spirit and activities on a global scale.
The government is fostering a shift toward private sector-led venture investment and introducing new support methods. To achieve this, it is moving away from a government-led and supplementary support approach. Instead, a total of 2 trillion won will be raised by both private entities and the government to establish the Startup Korea Fund by 2027. This fund will focus on investing in three key areas: deep tech, global expansion, and secondary returns. In connection with this initiative, the MSS has increased the budget for initial fund investments by 140.5 billion won in the 2024 budget proposal.
The government is also shifting away from a policy primarily focused on individual startup support and is instead fostering open innovation by utilizing external resources. As part of this effort, it is expanding the large enterprise-startup collaboration program to encompass the top ten key sectors with significant gaps, promoting synergy between large corporations and startups.
The top ten areas with significant disparities include system semiconductors, bio-health, future mobility, environment and energy, robotics, big data and artificial intelligence (AI), cybersecurity and networks, aerospace and maritime, next-generation nuclear power, and quantum technology.
To encourage strategic investments by large corporations in startups, there are considerations for relaxing regulations such as external investments in general holding companies holding CVC and overseas investment limits. The implementation of negative regulatory exceptions will designate two or more “global innovation zones” in the second half of the year, where companies can experience rapid growth.
The government is pushing for regulatory improvements to make it easier for foreigners to start businesses and work for startups in South Korea. It is considering easing the visa requirements for specialized personnel (E-7 visa) in industries with high demand for startup talent. In addition, it is exploring the possibility of granting startup visas and providing financial support for business development to individuals who have both technical expertise and a viable business plan.
Furthermore, there are plans to initiate a new program called “K-tech college,” which will connect outstanding university students from developing countries like Vietnam with education in the field of software provided by domestic companies. This program aims to facilitate their employment in South Korean startups.
A global startup hub is also being established. A “Space-K” will be created in the capital area, providing a platform for young people from around the world to freely communicate and exchange ideas. Programs for foreign startup founders, which were previously centered on competition, will expand to include support for domestic business development. To systematically assist these initiatives, a new “Global Startup Center” will be established.
A new program called “Global TIPS” will be introduced in which the government provides matching support to startups that receive investments from foreign venture capital (VC) firms of a certain size. There will also be a relaxation of visa requirements for specialized personnel (E-7 visas) in specific industries. The “Space-K” to be established in the capital area will be developed into a global startup hub, facilitating exchanges among young people from around the world.
The restriction on CVC funds held by general holding companies is being lifted so they can receive external investments of up to 40 percent. This change is part of an amendment to the Fair Trade Act and requires legislative approval. The government expects that this will promote strategic investments by large corporations in startups and result in an increase in investment volumes.
During a briefing at the government complex on Aug. 29, Minister Lee Young of the MSS stated, “There will be private sector participation in the Startup Korea Fund,” and added, “We aim to expand K-startups to five among the world’s top 100 unicorns, propelling South Korea into Asia’s number one and one of the world’s top three global entrepreneurship nations.”