South Korea is significantly scaling up its startup and innovation financing, doubling the size of its 2026 Mother Fund to a record ₩2 trillion ($1.5B) and unveiling a new ₩100 trillion ($74B) National Growth Fund. The measures mark the largest government-backed capital commitments for Korea’s startup and strategic industry ecosystem to date, particularly in AI, deep tech, semiconductors, and biotech. It signals a decisive shift toward long-horizon capital for future industries.

Record Expansion of Korea’s 2026 Mother Fund

The Ministry of Economy and Finance confirmed on August 29 that the Mother Fund (Fund of Funds) allocation will rise from ₩989.6 billion in 2025 to ₩1.9997 trillion (approximately $1.5 billion) in 2026 — the largest increase since the fund’s inception.

The breakdown of allocations includes:

• ₩600 billion (~$444M) dedicated to advanced-industry unicorn development.
• ₩800 billion (~$593M) for “re-challenge” entrepreneurs, up sharply from ₩100 billion.
• The startup package budget will also rise from ₩1.538 trillion to ₩1.624 trillion (~$1.20B), including AI & Deep Tech specialization supporting 175 companies.

As in previous years, the Mother Fund will be leveraged through private capital and recycled returns to generate sub-funds several times larger than the government’s contribution.

With the new allocation, a potential ₩8 trillion ($5.9B) in sub-funds could be mobilized for startups across Korea, assuming similar leverage ratios as prior years are applied.

Launch of Korea’s $74B National Growth Fund

Complementing the Mother Fund expansion, the government will establish a National Growth Fund of at least ₩100 trillion (~$74B) over five years, designed to accelerate Korea’s transition into future strategic industries.

• ₩50 trillion (~$37B) will be raised through a Strategic Industry Fund operated by the Korea Development Bank, backed by government-guaranteed bonds.
• ₩50 trillion (~$37B) or more will be matched by private sources such as pension funds, institutional investors, and public subscription capital.
• The government will contribute ₩1 trillion (~$740M) in subordinated capital to absorb first losses, de-risking private participation.

Funding instruments will include low-interest loans, guarantees, equity investments, indirect investment vehicles, and infrastructure financing.

Investments will also extend to national strategic projects such as AI data centers and ‘energy highways’ network.

Strengthening the TIPS Program and Open Innovation

The TIPS program (Tech Incubator Program for Startups), a flagship public-private accelerator initiative run by the Ministry of SMEs and Startups, will also receive unprecedented expansion:

• Budget increase: From ₩641.2 billion in 2025 to ₩1.1064 trillion ($820M) in 2026.
• Standard TIPS support: Increased from ₩500 million to ₩800 million (~$593K) per startup.
• Scale-up TIPS: Raised from ₩1.2 billion to ₩3 billion (~$2.22M).
• Beneficiary companies: Expanded to 1,240 startups.

Other related initiatives include:

• A new “Unicorn Bridge” program: up to ₩20 billion (~$15M) in tailored support and guarantees per company for 50 startups that have already secured ₩10 billion in private funding.
• Open Innovation budget: Increased from ₩73 billion to ₩84.2 billion (~$62.4M), with participating companies increased to 600.
• Youth Startup Academy: Global track expanded from 60 to 100 programs, with 200 newly established AI & Deep Tech specialized courses.
• A ₩30 billion (~$22M) newly launched Social Enterprise Startup Support Program to back 500 teams with funding and tailored support.

2026 Budget Priorities for Startup and Venture Finance

Deputy Prime Minister and Minister of Economy and Finance Koo Yoon-cheol framed the budget expansion as part of a broader 2026 National Budget Plan that raises total government spending to ₩728 trillion (~$537B), with AI, R&D, and advanced manufacturing identified as priority growth engines.

Han Seong-sook, Minister of SMEs and Startups, emphasized the ambition at a briefing on August 28:

“We must build the venture investment market to an annual scale of at least ₩40 trillion to ensure that Korea not only continues its strong record in IT and manufacturing but also delivers results in AI. Expanding the venture market during my term is a priority I intend to push forward.”

Korea’s Decisive Path to Grow Global Unicorns

In the end, the expansion of Korea’s 2026 Mother Fund and the launch of the National Growth Fund represent a decisive scaling up of public-private venture capital infrastructure for the country’s startup ecosystem.

Together, these Korea’s fund expansions are designed to:

• Anchor long-term financing for deep tech and other strategic industries.
• Support the scale-up of startups into unicorns, while providing structured pathways for re-challenge entrepreneurs, social enterprises, and international expansion.
• Strengthen Korea’s position in AI and semiconductor innovation within both the regional and global landscape.

₩2 trillion ($1.5B) allocated to the 2026 Mother Fund and ₩100 trillion ($74B) pledged through the National Growth Fund mark dual commitments that set a new benchmark in Korea’s venture finance policy.

They also underscore a strategic effort to ensure that the next generation of Korean startups can grow into unicorns with genuine global competitiveness.

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