Canada has invested over CAD 4.4 billion (approximately USD 3.3 billion) in its national AI strategy since 2017, but it has failed to secure significant intellectual property (IP) rights, with only 7% owned by Canadian companies. The remaining 93% has effectively gone to foreign capital and firms. This situation raises concerns as South Korea also sees a rising proportion of foreign investment in promising AI startups, prompting calls for measures to protect key IP at a national level.
Despite pouring billions into the AI ecosystem, the benefits are predominantly reaped by foreign investors. Currently, foreign investment in South Korea's AI sector accounts for about 20% of the total. While there is a need to encourage foreign investment, the proportion of domestic IP ownership among promising companies is reportedly similar to that of Canada.
For instance, Twelve Labs, a leading AI startup specializing in video understanding, has seen about 85-90% of its total investment of approximately USD 107 million (about KRW 164.5 billion) come from foreign capital as of the end of last year. The lead investors across all funding rounds have been U.S. venture capital firms such as NEA, NVIDIA NVentures, and Index Ventures, with only minor strategic investments from domestic firms like Korea Investment Partners and SK Telecom. The company is also headquartered in San Francisco.
Similarly, Lunit Technologies, a frontrunner in AI service platforms, has experienced an increasing share of foreign capital as it grows. Domestic institutions led the Series A round (KRW 15 billion), but from the Pre-Series B round (KRW 25 billion) onward, U.S.-based BlueRun Ventures took the lead. In the Series B round completed in March this year (KRW 108 billion), Silicon Valley-based Goodwater Capital was the lead investor. It is estimated that 50-60% of the total investment of KRW 130 billion has come from foreign sources.
Upstage, which leads the independent foundation model project, has had U.S. VC firm Sage Partners as the lead investor since its inception. Although the Industrial Bank of Korea led the Series B bridge round (KRW 62 billion), new participation from Amazon and AMD increased the share of foreign capital. The first tranche of Series C funding (KRW 180 billion) in April was also led by Sage Partners, with foreign capital accounting for around 30%. However, the influx of the National Growth Fund has reportedly reduced the foreign capital share to about 10%.
Industry experts argue that, like Canada, relying solely on government funding will not suffice to protect key IP. There is an urgent need to expand private investment based on domestic capital. The Software Policy Research Institute (SPRi) highlighted that government funding constitutes 22.9% of R&D financing for Korean AI startups, four times the average across all industries (5.7%), indicating the vulnerability of domestic private investment.
An industry insider stated, "If an environment for private IP acquisition is not established, the issue of IP ownership, which is central to Sovereign AI, will be addressed solely through taxation. The success of Sovereign AI depends on creating an environment where the private sector can secure IP independently."
* This article has been translated by AI.
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