The South Korean government is stepping up investments in startups as it seeks to create global unicorns set up by Koreans, according to a report by The Korea Economic Daily.
The plan is to inject a total of 14.2 trillion won (about $10.7 billion) into Korean-owned and Korea-based startups through private venture funds by 2027, the report, which was based on the announcement by the Ministry of SMEs and Startups (MSS), said.
The amount is 13.6% higher than what the government had originally planned, the report added. As part of the funding, the government plans to form a Startup Korea Fund by the same year to raise 2 trillion won.
The ministry has invited financial services firms, venture companies, business groups, and pension funds to join government-led startup funds. The investment will focus on artificial intelligence, chips, deep tech, secondary funds, and global investment funds.
Aside from providing subsidies and investments, the government also plans to extend loans to startups.
By next year, the government will also expand its startup nurturing programmes to Korean-launched overseas venture companies. Currently, the government-backed startup funds have funnelled only into South Korea-based startups, either owned by locals or foreigners.
“The government will be a strong supporter for young people to start businesses and expand into the global market,” President Yoon Suk Yeol said.
Early this year, Korea’s MSS announced lining up about $751 million fund of funds to support venture capital investments in the country.
South Korea’s first quarter of 2023 saw a significant drop in both the amount of venture funds raised and the performance of venture investments, with a decline of 78.6% and 60.3%, respectively, over the same period of 2022.
Despite the seemingly bleak figures for venture investments in the first quarter of 2023, the country recorded a 13-14% increase compared with the first quarter of 2019 and 2020.
The MSS intends to enhance relevant laws, systems, and infrastructure to provide assistance to homegrown startups that are expanding overseas as well as develop policies to support foreign talent in launching businesses in Korea.