The government will roll out a broad package combining regulatory exemptions with fiscal, financial and talent support for 10 “startup cities” to be designated by next year, aiming to spur a nationwide startup boom and reshape local startup ecosystems beyond simple subsidies.
The Finance and Economy Ministry announced the plan on the 24th at an emergency economic headquarters meeting and National Startup Era strategy session chaired by Deputy Prime Minister and Finance and Economy Minister Koo Yun-cheol.
To build talent-driven startup hubs, the government will first select four cities this year that host science and technology institutes such as KAIST, DGIST, GIST and UNIST. It will add six more non-metropolitan areas by the first half of next year, for a total of 10 startup cities.
The designated areas will receive “mega special zone” level regulatory easing to lower barriers for testing new technologies and business models. Sectors that previously had to go through separate regulatory sandbox procedures are expected to get faster permits and temporary regulatory waivers within startup cities. The government expects the changes to speed commercialization in strategic industries including AI, biotech and advanced manufacturing.
Fiscal and financial support for startups in the regions will be expanded. Eligible firms will be offered up to 350 million won in commercialization funding, with follow-on investment linked through a newly created regional growth fund. The fund is set to launch this year at 450 billion won or more and expand to 2 trillion won by 2030. The government also plans tax and fiscal incentives for non-capital-area investment to draw more private venture capital.
To strengthen exit options, the government will create a “venture capital brokerage platform” to support trading in unlisted startup shares and will pursue steps to expand venture investment by retirement pensions and public pension funds. The goal is a virtuous funding cycle from early-stage growth through exit.
The government will also revise rules to help startups recruit talent. Approval time for professors and researchers to start businesses will be cut from up to six months to about two weeks, and startup-related leave will be allowed for up to seven years. For university students, restrictions on taking a leave of absence to start a business will effectively be eliminated.
Plans also call for linking R&D with startup infrastructure. Startup cities will establish innovation startup institutes and deep-tech startup hub universities so technology development, commercialization and investment can be connected in one place. The package will include work space, testbeds and demonstration infrastructure, operating as a cluster linking “labs, companies and investment.”
To better connect startups with local economies, the government will develop “glocal” commercial districts and local theme shopping areas near startup cities. Companies that attract investment will be eligible for additional support, including matching loans of up to 500 million won and about 200 million won in extra commercialization funding, to help local startups translate into sales and jobs.
The government said the startup-city model is intended to disperse a capital-area-centered startup ecosystem and create conditions for technology-based startups to grow in the regions.
A government official said startup cities are “comprehensive startup clusters” that simultaneously loosen constraints on regulation, funding, talent and infrastructure, adding that the government will build a foundation for unicorn companies to emerge outside the capital region.
* This article has been translated by AI.
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