On September 2, 2025, South Korea’s Ministry of SMEs and Startups announced something that caught global attention: they’re allocating KRW 550 billion (~USD 400 million) specifically for AI and deep tech startups under the NEXT UNICORN Project. But here’s the thing that really matters-this is just the beginning. South Korea’s total startup support budget for 2026 is hitting KRW 3.4645 trillion (USD 2.6 billion), the largest scale ever. So what’s actually going on? Why is an entire government betting this hard on startups? Let’s break it down.
Why Ministry Allocated 550 Billion – Main Reason
The country sits between two tech superpowers-China and the US-both pouring billions into AI, semiconductors, and deep tech. Korea’s playing the middle, and it’s a dangerous position. The government realized that their traditional approach of supporting large conglomerates like Samsung and Hyundai isn’t enough anymore. They need startups. They need innovation. They need unicorns.
The core reason for this massive allocation is simple: venture investment in Korea has contracted since its 2021-2022 peak. After the boom years, capital dried up. Startups couldn’t find funding. Entrepreneurs were leaving Korea to start companies in Silicon Valley. The government looked at the data and said: “This is a crisis we need to fix.”
The Ministry of SMEs and Startups decided to become the VC when private investors stepped back. By allocating KRW 550 billion for AI and deep tech under the NEXT UNICORN Project, they’re not just funding startups. They’re signaling to the world: “Korea is serious about building the next generation of global technology leaders.”
Why AI and deep tech specifically? Because those are the fields where Korea can compete globally. Unlike general software startups, deep tech ventures (robotics, quantum computing, advanced semiconductors, fusion energy, AI) are where Korea has existing expertise and talent. The government is placing bets on companies building technologies that require years of R&D and massive capital—exactly what startups struggle to fund alone.
Why Every Major Country Must Have Such Things
Here’s what Korea figured out that other countries are still learning: startup infrastructure is like building roads. You can’t get to the destination without it.
When countries don’t invest in startups systematically, they suffer brain drain. Young talent moves away. Innovation happens elsewhere. Tax revenue moves elsewhere. When Korea saw startups leaving for America, they lost not just the companies—they lost the potential jobs, tax revenue, and reputation.
Every major country needs this because the alternative is being left behind in the AI era. Countries like the UK, Canada, and Singapore are now doubling down on startup funding because they understand: whoever builds the most startups in AI and deep tech wins the next 20 years economically and geopolitically.
Moreover, startups create jobs that manufacturing never could. A single successful AI startup can create 500+ high-paying jobs. It attracts other companies. It builds reputation. It attracts more investment. It becomes a self-reinforcing ecosystem. Governments are finally understanding that betting on startups is the best economic policy.
Where This Fund Is Going to Be Used?
The KRW 550 billion breaks down into concrete programs:
NEXT UNICORN Project: Half of the allocation flows into AI and deep tech, supporting startups building technologies in artificial intelligence, robotics, quantum computing, semiconductors, and advanced manufacturing.
Super-Gap Startup Project: 200 deep-tech ventures get selected across two stages—Core-DIPS (basic support) and Global-DIPS (follow-up support). Each startup receives up to KRW 1.2 billion in direct support, combining KRW 600 million for commercialization and KRW 600 million for R&D over five years. That’s not a one-time grant. That’s sustained, long-term capital.
Regional Innovation Hubs: Policy support for regional ecosystems is set to more than than double. By 2030, the government aims to develop ten regionally anchored startup hubs across the country. This prevents Seoul from becoming the only place startups can survive.
R&D Support: KRW 2.2 trillion is allocated for R&D, marking a 45% increase over 2025. KRW 749.7 billion will support new R&D projects, more than double the previous year’s level.
Commercialization and Scale-up Funding: KRW 8.151 trillion will be invested in commercialization. This isn’t just R&D money. It’s money to take research and turn it into actual products people pay for.
Who Is Going to Get Benefit?
First: Early-Stage Deep Tech Founders. If you’re building robotics, quantum computing, AI, or advanced materials, Korea now has capital waiting for you. 120 startups will be selected in the first round of Super-Gap with applications open December 29, 2025, running until January 23, 2026. Each gets up to KRW 1.2 billion in support.
Second: Regional Entrepreneurs. For the first time, the 2026 Startup Package incorporates regional preference policy aimed at reducing the economic gap between Seoul and the rest of the country. Non-metropolitan startups benefit from differentiated private contribution ratios, with Special Support Areas receiving 10% private share (government covers 90%). This means if you’re building a startup outside Seoul, the government basically funds 90% of the risk.
Third: SMEs and Scaling Companies. Funding for SME research and development was restored and expanded, paving the way for a record KRW 2.2 trillion allocation in 2026. Existing small companies that want to innovate and grow get access to R&D funding.
Fourth: Entire Korean Economy. When you create unicorns, they create wealth, jobs, and tax revenue. They attract more investment into the country. They build Korea’s brand as a tech nation. They compete against US and Chinese companies globally. This is a bet on Korea’s future.
The Timeline Matters: Applications for Super-Gap opened December 29, 2025, closing January 23, 2026. The Ministry of SMEs and Startups began accepting applications on January 6 for Deep Tech-Specialized track, with submissions open until January 27 at 4:00 PM KST.
The real story here is that South Korea isn’t just throwing money at startups and hoping something sticks. They’re building infrastructure. They’re creating systematic pathways from idea to global company. They’re funding in stages—from R&D support to commercialization to scale-up funding. They’re rewarding regions that aren’t Seoul. They’re betting on deep tech where Korea has competitive advantage.
This is what serious startup policy looks like. And it explains why Korea is doing it: because venture capital dried up, the government had to step in. Because other countries were winning the startup game, Korea had to get aggressive. Because the AI era requires nations to have thriving startup ecosystems to stay competitive.
The KRW 550 billion allocated to AI and deep tech isn’t charity. It’s economic strategy. And if it works, Korea could produce the next wave of global tech leaders. If it doesn’t, Korea falls behind. That’s why this allocation matters so much.
Hi Friends, This is Swapnil, I am a content writer at startupsunion.com