South Korea’s Ministry of SMEs and Startups has proposed a 2026 budget of 16.8 trillion won (US$12.3 billion), up 1.6 trillion won (US$1.17 billion) from this year.

The plan, set to be submitted to the National Assembly on September 3, allocates increased funding for AI, deep tech, and biotech, as well as expanded support for startups and entrepreneurs.

Venture investment funds will rise, with 1.1 trillion won (US$803 million) for the country’s main fund-of-funds, half allocated for AI and deep tech, and a 1.3 trillion won (US$949 million) “re-challenge fund” for failed founders, supported by 800 billion won (US$584 million) in government funding.

The ministry also plans to expand secondary and M&A funds to boost capital recovery in the startup ecosystem.

R&D spending is set to hit a record 2.2 trillion won (US$1.61 billion), with new programs for public-private commercialization and AI adoption in manufacturing.

Other initiatives include new support for export-focused businesses and a program to help tech firms with proven growth potential scale globally.

🔗 Source: Chosun Biz

🧠 Food for thought

1️⃣ Korea’s decade-long government funding escalation demonstrates sustained commitment to startup leadership

Korea’s budget increase to KRW 16.8 trillion represents a dramatic escalation from the government’s $3.7 billion commitment over three years announced in 20141.

This sustained investment approach spans over a decade, with the government planning to invest $12 billion over four years as of 20232, showing Korea’s consistent long-term strategy rather than cyclical policy changes.

The latest budget allocation of approximately $12.5 billion annually makes Korea one of the most aggressive government backers of startups globally on a per-capita basis.

Unlike many countries that fluctuate their startup support based on economic cycles, Korea has maintained an upward trajectory in funding even as global venture capital faced challenges in recent years.

2️⃣ Strategic sector focus mirrors global AI investment patterns but with concentrated government backing

Korea’s decision to allocate half of its record KRW 1.1 trillion mother fund to AI and deep tech aligns with global trends where the AI market is projected to reach $826.7 billion by 20303.

However, Korea’s approach differs significantly through concentrated government involvement, while global AI funding has been primarily driven by private investors—the US alone saw $42.5 billion in private AI startup funding in 20233.