Rancho's Korea Startup Story

Time for Seoul to Share the Startup Spotlight?

Ranked 9th in the list of best cities to launch a startup, Seoul is making its mark as one of the greatest hubs for innovation. This is undeniably an accomplishment. Seoul is drawing the attention of international investors and fostering a nurturing environment for startups to grow. However, as mentioned in a previous post, this glory is heavily limited to the capital as the Ministry of SMEs and Startups reported that 81.4% of venture capital investments in Korea are made in Seoul.??

The high proportion of VC investments in Seoul has not experienced a significant change in the past few years. Today, Busan is home to 2.0% of VC investments while Daegu still lingers around the 1.0%. If anything, we’ve seen the centralization of startups in Korea exacerbate with foreign investments in Seoul increasing while they decline outside of the capital. Acknowledging this concern the Korean government has been taking action to expand the geographical boundaries of its startup scene. As a result, although not noticeable at first glance, South Korea’s startup ecosystem has been experiencing a slow but observable push towards a more decentralized and inclusive model.??

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Government Initiatives for Regional Growth?

Korea’s startup landscape has adopted an approach that highly involves the government. Most startup funding is sourced from government funds as the government actively allocates its resources to support startups. Government support is so prevalent it’s even harder to find a startup that has not received government funding. So, it’s not shocking that the government is leading the efforts to decentralize the startup ecosystem. For example, the Korean government recently announced their plans to strengthen the competitiveness of regional growth which includes supplying 1 trillion won of funds to support and build new regional venture funds until 2026.??

In addition to providing funding, the government is also providing infrastructure. Improved infrastructure has been a key factor in the enabling the creation startups outside of Seoul of South Korea. This is especially the case with the development of smart cities and innovation hubs in regions like Daejeon, Gwangju, and Busan which have provided startups with state-of-the-art facilities and technological resources. Seoul is incredibly dominant due to much of the country’s human capital, technology, and other resources being concentrated, thus development of infrastructure supports the growth of tech-driven startups while also attracting talent from these regions.??

All in all, South Korea’s startup ecosystem remains fairly centralized and with foreign investments focusing more and more on Seoul by the year. But recent government action to expand funding and startups to other regions shows a gleam of hope for a sturdier and more diverse startup ecosystem in the making.?

This article has been written by Rancho & Tae Kyeong Hong

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