South Korea – which already hosts a national flock of 10 unicorns – is quietly backing its ambition to become a leading player in the global startup ecosystem with policies, support packages, and cash injections worth US$1.2 billion.
Policy support
As part of the wide-reaching series of initiatives, 21 new startup support programs have been created. A $35 million Innovative Startup Package is to be launched by the Ministry of SMEs and Startups. A $10 million R&D program is also planned by the Rural Development Administration to promote AgriTech. And the Ministry of Justice, which controls immigration, is opening South Korea’s doors to foreign entrepreneurs to lure startup talent from overseas. The numbers demonstrate the country’s strengthening commitment to the startup sector, and the support is almost double the amount of $650 million government invested in the sector in 2018.
Financial support
In December 2019, Finance Ministry announced a $248 million funding package to support future unicorn startups operating in the fintech sector. This fiscal support compliments an existing regulatory sandbox system that enables entrepreneurs to develop financial products and services within a protected environment, avoiding the strict regulatory constraints faced by established players in the open market.
Education and training support
The government is also committing funds to provide facilities and space for startup education and mentoring across the country. Support will also extend to new demographics, including aspiring startup entrepreneurs above the age of 40. Some previous programs were only offered to those aged under 39.
Korea’s established TIPS program (Tech Incubator Program for Startups) is expanding. Going forward, it will not only provide support for companies in its program but also to those preparing to enter it, as well as those that recently graduated. Designed to identify and nurture startups with groundbreaking technologies, the TIPS program creates opportunities for wannabe players to meet angel investors and mentors and has allocations for incubation and R&D funding.
The Ministry of SMEs and Startups works with a large number of affiliated organizations, such as KISED, or the Korea Institute of Startup and Entrepreneurship Development, that has supported more than 40,000 startups through a wide range of programs since founding in 2008. Seoul is creating a post-graduate training program for graduates of a state-sponsored entrepreneurs’ college, the Youth Startup Academy, to help them expand internationally.
Global support
Beyond direct financial support, the government will also provide startup-focused facilities across the country and even overseas, including opening Korea Startup Centers (KSCs) in Sweden and Finland to promote the globalization of Korean startups and build international networks, especially in Scandinavia’s growing ecosystem.
Development support
Meanwhile, the Ministry of SMEs and Startups’ “Smart Republic of Korea” initiative goes full-scale in 2020. The “Smart Republic of Korea” is a broadly defined ambition. The initiative encompasses a range of policies to support entrepreneurship and research and development, to realize a goal to become one of the world’s top countries for startups.
This involves tailored support for companies at different stages of development, as well as differentiated support for research and development. As part of the initiative, the ministry will create subsidies and a so-called “fund of funds” to provide funding to SMEs that have financial constraints but are rich in a technical capacity. Segmented support will be provided for research and development in strategic technologies connected to the Fourth Industrial Revolution, parts and materials, and the so-called big three: system semiconductors, bio-health, and future cars. As part of the initiative, the ministry announced it would earmark about $25.4 million to support startups offering smart services, promote the development of high value-added AI products, and encourage R&D in big data-related services.