South Korea will invest $400mn (approx. £264mn) in local startups, according to a government statement released today.
The Ministry of Trade, Industry and Energy said it would be funding “new and indigenous products and technologies that will help boost the country’s economy and exports.”
This latest push follows President Park Geun-hye’s previous commitments to the burgeoning South Korean tech scene, investing KRW 2.17trn ($1.97 bn) last year, and KRW 2,25trn ($2.04bn) in 2013.
Of the $400mn promised to startups in the region, KRW 194bn ($176mn) is to be directed at 13 industrial ‘growth engines’ including smart wearables, self-driving cars, and drones.
“The ministry will soon launch the so-called stepping-stone project that will allow early commercialisation of products that are made available as an interim outcome of the development program,” the department said in a press release.
Through the development programme, the South Korean government hopes to diversify the country’s exports. Despite its outbound shipments reaching an annual high last year, increasing by 2.4 percent to $573.1bn, the country’s exports are primarily dominated by 5 key industries, including semiconductors and petroleum, which accounted for 45 percent of overall outbound goods in 2014.
Following governmental backing, a number of South Korean startups have achieved success with public releases or in landing major funding, such as Yello Mobile securing $100mn from Silicon Valley-based venture capital firm Formation 8.
December also saw Daum Kakao, the company behind the KakaoTalk messaging app, align with K Venture Group with $90mn in the bank, to help it seek out promising startups.
Recent government involvement has also seen areas such as the Seoul neighbourhood of Gangnam rise up as trendy startup hubs. Google is planning to open its first campus in Asia in Gangnam, and Naver, the South Korean internet giant is set to launch a startup incubator early this year.
However, industry experts admit that South Korea’s big tech groups, such as LG, Samsung and SK Telecom, still overlook domestic startups. “Big companies do almost no M & As,” said Simon Lee, founder of Gangnam-based translation app Flitto. “They don’t want to admit they are inferior to startups,” he added.