South Korea has set its sights on becoming a global hub for startups and fostering the growth of billion-dollar companies known as “unicorns.” In a strategic move, the South Korean government, led by President Yoon Suk Yeol, has unveiled a “Comprehensive Startup Korea Plan” to support entrepreneurship and innovation domestically and internationally. This ambitious plan encompasses various initiatives, including funding for deep tech startups, global expansion support, and a shift towards a private sector-led approach. In this article, we’ll delve into the details of South Korea’s vision and the measures being taken to realize it.
Creating a Global Unicorn Hub in Seoul
The announcement was made during the “Startup Korea Strategic Meeting,” organized by the Ministry of SMEs and Startups (MSS), involving 110 officials from startups, venture firms, related associations and the government on August 30. President Yoon said during the meeting, “We must build a world-class startup infrastructure and grow into a global startup hub. The government will provide active support so that our young people who are making attempts at innovation can freely launch businesses and step out into the global market.”
The Comprehensive Startup Korea Plan outlines a clear direction for medium to long-term entrepreneurship policies, aiming to achieve several ambitious goals by 2027. Among these objectives is nurturing five companies to become world-leading unicorns, with valuations exceeding $1 billion.
The government has set ambitious goals to achieve it by 2027, including nurturing five companies with innovative services. It also seeks to elevate Seoul’s position to 7th in the rankings for startup and venture ecosystems, achieving a venture investment scale of 14.2 trillion won ($10.6 billion) and a local technology-based startup rate of 40 percent.
Additionally, it plans to inject 500 billion won ($375 million) 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 globally.
Global Expansion and Private Investment
To facilitate the global expansion of South Korean startups, the government plans to establish startup centers worldwide. These centers will collaborate with major corporations to provide tailored strategies for entering international markets. As part of this initiative, the government, in a joint effort with the private sector, will establish the “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. “Now we need to move away from relying solely on domestic markets and a mere increase in the number of entrepreneurs, often propelled by direct government support,” President Yoon Suk Yeol said.
The government is encouraging a shift toward private sector-led venture investment and introducing new support methods. 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.
To further stimulate the growth of startups, South Korea is promoting collaboration between large corporations and startups in ten key sectors. These include system semiconductors, bio-health, future mobility, environment and energy, robotics, big data and artificial intelligence (AI), cybersecurity, aerospace and maritime, next-generation nuclear power, and quantum technology. Regulatory improvements are being considered to facilitate investments by large corporations in startups.
Facilitating Foreign Entrepreneurship
South Korea is making it easier for foreigners to start businesses and work for startups. This includes potential changes to visa requirements for specialized personnel and the introduction of startup visas. Additionally, a program called “K-tech college” is in the works to connect international students with software education provided by domestic companies to encourage their employment in South Korean startups.
Establishing a “Space-K” in the capital area will allow global youth to communicate and exchange ideas freely. South Korea is expanding its support for foreign startup founders and introducing programs to assist domestic business development. A new “Global Startup Center” will be set up to coordinate these initiatives systematically.
Matching Support and Investment
South Korea is introducing the “Global TIPS” program, which provides matching support to startups receiving investments from foreign venture capital firms. This program aims to boost international collaboration and attract foreign investments. In addition, restrictions on corporate venture capital (CVC) funds held by general holding companies are being lifted to encourage strategic investments in startups.
South Korea’s ambitious plan to become a global startup hub and nurture unicorns represents a significant shift in its entrepreneurial landscape. With a strong focus on private sector-led growth, international expansion, and collaboration between startups and large corporations, South Korea is poised to make a mark on the global stage. By supporting innovation and entrepreneurship, the government aims to propel South Korea into the ranks of the world’s top entrepreneurship nations, ultimately fostering economic growth and technological advancement.
- Seoul Metropolitan Government Launches 5 Trillion Won (3.7 billion USD) ‘Seoul Vision 2030 Fund’ to Foster Startups
- Seoul Metropolitan Government (SMG) announces 100-billion-won support package for promising startups
- Korean Government Announces $ 858 million Investment in 42 Venture Funds to Foster Innovation
- South Korea’s Venture Investment Plummets by 42% in H1 2023, Amidst Global Caution