Seoul to inject W2tr fund to incubate 1,000 tech-focused startups by 2027

'Most of our startups are service, platform providers, not hard-tech companies': SMEs minister

SMEs and Startups Minister Lee Young speaks during a briefing at the Seoul Center for Creative Economy & Innovation, in central Seoul, Thursday. (Ministry of SMEs and Startups)

The Ministry of SMEs and Startups said Thursday it plans to inject more than 2 trillion won ($1.4 billion) of investment comprised of state and private fund to incubate around 1,000 advanced technology-based startups for the next five years.

Categorized as the “deep-tech” sector, the ministry selected 10 industries of growth including system semiconductors, biologics and health care, future mobility, next generation nuclear power plants and quantum technology.

It is the largest support package to be catered by the SMEs ministry for budding enterprises across these industries. Of the 2 trillion won, the ministry will provide 66 percent or 1.3 trillion won to back research and development, commercialization and follow-up support for the startups.

The project is meant to nurture “hard-tech” companies, referring to research-focused firms that take on technical or engineering challenges which are expected to provide significant solutions that could contribute to technological advances and the well-being of society if they succeed.

“With the advent of the digital economy spurred by the Fourth Industrial Revolution, high tech companies should be at the forefront of research and development and creating new markets, which can bring value-added businesses here. But most of our startups are service and platform providers, not hard tech companies,” said SMEs and Startups Minister Lee Young.

Lee added that although South Korea has seen 23 unicorn companies exceeding 1 trillion won of corporate value, they are not global unicorns. “We need companies with advanced technology that can have a competitive edge in global markets as well.”

The Ministry’s Deep Tech 1000+ Project aims to provide funding for research and development and support from the government’s research institutions to high-tech startups with significant potential for foraying into overseas markets.

On average, each company can receive from 800 million won to 3.1 billion won.

Among the 1,000 advanced tech startups in the Deep Tech project, the ministry plans to select the top 100 attractors of private investor funding, and support their entry to global markets.

Stressing the importance of foreign capital, Lee said the government will expand the size of its “global fund” from 6.3 trillion won to 8 trillion won until next year. The fund is composed of the government’s funding, which invites foreign venture capitals to participate in search of promising Korean startups.

“Many countries are actively investing in advanced technology as a means to get a hold of technological hegemony. For Korean startups, this global fund will play a vital role in attracting foreign capital,” Lee said.

In addition to the global fund, the ministry plans to set up a 110 billion won “deep-tech fund” to lure domestic venture capitals to invest in the high-tech startups.

By Byun Hye-jin(hyejin2@heraldcorp.com)