The Quiet Rise of South Korea as a Powerful Startup Hub

South Korea is best known for the K-wave: K-pop, K-dramas, K-beauty, and K-food. What goes unnoticed beneath all this Hallyu is K-startups, which are quietly growing their influence across the globe.

Seoul jumped to #8 in Startup Genome's 2025 Global Startup Ecosystem ranking, ahead of Singapore, Shanghai, Tokyo, and Bengaluru. This ranking factors in success metrics like performance, funding, talent, market reach, and AI-native capabilities.

The rise of South Korea as a top Asian startup hub didn't happen overnight. Over the last decade, the startup ecosystem has grown tenfold: from 200 scaleups—startups with $1 million or more in funding—to over 2,100. This has made the tiny country of 51 million people a powerhouse for innovation in Asia, outside of China and India.

As of now, South Korea has over 26,000 startups, of which one-third have collectively $102 billion in VC and PE money so far.

Even amid the continued global VC pullback last year, South Korea added 219 new scaleups that raised $5 billion in total. The first quarter of 2025 showed positive momentum with 41 new scaleups and $0.7 billion raised.

Overall, South Korean startups (including scaleups) bagged a total of $4.2 billion in H1 2025, up 3.2% year-on-year. The story gets even more interesting once we zoom in: There was a 30% rise in average check size, five mega rounds, and two unicorns.

On top, venture capitalists raised $4.6 billion between January and June 2025, up 19.4% over a year ago—the second-highest first-half result on record. Meaning, investors are getting the dry powder ready for the local ecosystem.

What's the Driver?

So, what's behind the rise and rise of the Korean startup ecosystem?

With the Korean wave overtaking the world, gaining a massive following for Korean culture in the last few years, the government woke up to the possibility of Korean tech startups dominating the world. Just as Korea’s legacy auto and electronics companies once did decades ago.

To turn that possibility into reality, the government focused on one thing: a coordinated approach to enable local startups to expand beyond borders and woo foreign startups to set up shop in the country.

From setting up state-backed funds in partnership with chaebols (deep-pocketed local corporates) and foreign investors for funding local firms to opening the domestic market and providing funding for global entrepreneurs, South Korea is not leaving any stone unturned.

With aggressive state backing, resilient funding momentum, clear on-ramps for foreign founders, and increasing cross-border capital—the South Korean startup ecosystem is all set for the next phase of growth.

In this edition of Hedwig, we will dive into South Korea’s multiprong strategy to make the country the next hottest destination for startups.

State-Backed Funds

At the center of South Korea's ambition to become a global startup powerhouse lies government-led funds that invest in local and foreign startups.

Global Fund

Launched in 2013, South Korea's flagship public–private program invests government capital in foreign-managed VC funds, which in return need to invest at least an equal amount into Korean startups. In short, we invest in you, you invest in our startups.

The government makes anchor investments in foreign VC funds through the “Mother Fund” called KFoF (Korea Fund of Funds), managed by the Korea Venture Investment Corp (KVIC), which was established in 2005 to revive investments in small and medium-sized enterprises and startups.

So far, the program has invested in 74 funds with a total corpus of KRW13 trillion ($9.3 billion), which have supported 652 Korean startups.

For the Global Fund 2025, launched in August 2025, South Korea selected 13 fund managers from six countries (the U.S., France, the U.K., Singapore, Japan, and Taiwan).

Co-investing KRW 170 billion ($130 million), the government coordinated the establishment of new funds totaling KRW 2.4 trillion ($1.84 billion), with the strategic focus on AI, climate tech, and secondary investments. France’s Jolt Capital leads the AI mandate with a KRW 949.2 billion ($678 million) fund.

Startup Korea Fund

In August 2023, the South Korean government unveiled its vision of 'Startup Korea', visualizing a nation where startups play a key role in driving economic growth. To achieve that vision, the government created the Startup Korea Fund in collaboration with large corporations, financial institutions, and SMEs.

The government contributes 30% to the corpus, while private investors fill up the rest. The goal of this fund? To invest KRW 2 trillion ($1.4 billion) in emerging firms by 2027 in deep-tech startups targeting global markets.

In 2024, the fund was set up with KRW 800 billion, while for the 2025 fund, announced in August this year, investors pooled in KRW 640 billion ($456 million) across 22 sub-funds. What’s noteworthy this year is the participation of foreign investors like the Tokyo Economic Center, along with Korean and Japanese businesses.

Policy Fund for National Strategic Industries

In March 2025, the South Korean government launched a KRW 50 trillion ($34 billion) policy fund specifically for national high-tech strategic industries. Run by the state-backed Korea Development Bank, the fund will provide treasury-rate loans and other investments to companies across 12 designated strategic techs (semiconductors, secondary batteries, biotechnology, artificial intelligence, and robotics, among others) over the next five years.

The fund is financed by government-guaranteed bonds, with KDB covering interest and admin costs. Interestingly, the fund will subsume last year’s $10 billion package for the semiconductor industry.

Its target is clear: fuel export-oriented scaling and supply chain integration in high-tech strategic sectors. Currently, the legal steps are underway for a rapid launch.

National Growth Fund

Earlier this September, South Korea announced the KRW 150 trillion ($110-billion) National Growth Fund to revitalize private sector investments in early-stage tech startups, with the ultimate goal of cultivating a "Korean version of Nvidia Corp." Given the country’s stronghold in semiconductors, this dream is not far-fetched.

Expected to launch by the end of 2025 or early 2026, half of its corpus will come from a high-tech industry fund backed by the state-run Korea Development Bank. The rest of the money will be raised from private sources, including financial services companies, commercial banks, brokerage firms, pension funds, corporations, and individual investors.

The National Growth Fund will aggressively invest—through direct and indirect equity investments, ultra-low-interest loans, and M&A financing—over the next five years in key strategic industries: AI semiconductors, biotechnology, vaccines, robotics, hydrogen, secondary batteries, displays, future mobility, and defense sectors, along with companies across their respective value chains.

The Super Gap Startup 1000+ Program

Run by the Ministry of SMEs and Startups (MSS) since 2023, the Super Gap Startup Program intends to invest a total of KRW 2 trillion (~$1.4 billion) in 1,000 super gap startups over the five years through 2028.

"Super-gap" (초격차) here means a durable, hard-to-catch technological lead. The program is intended for outstanding deep tech startups in 10 priority fields like AI, system semiconductors, bio & health, future mobility, green energy, robotics, AI & Big data, cybersecurity & network, aerospace & marine, next-gen nuclear, and quantum. Selected startups receive up to KRW 1.1 billion in direct support for R&D & commercialization, with additional follow-on scale-up grants for top performers.

Since 2023, the program has backed over 589 deep tech startups, including Rebellion, which has gone on to become a unicorn.

Corporate Venture Capital Alliance

Taking a cue from overseas corporate-led venture capital companies (CVCs)—which accounted for 23% of the total VC investments in South Korea in 2020—the government amended the regulations to allow domestic companies to own CVC units in 2021,  giving a boost to its startup economy.

To ensure that money flows from big corporations to emerging startups, the government joined hands with 42 domestic CVCs to launch the CVC Alliance in 2023. The participants included some big names like POSCO Technology Investment, GS Ventures, Lotte Ventures, Hyosung Ventures, Kolon Investment, and Dongwon Technology Investment.

This alliance’s aim? To create a CVC fund pool worth over KRW 8 trillion ($6.2 billion) by 2025. This entails a KRW 1 trillion ($783 million) policy fund and a KRW 7 trillion ($5.4 billion) privately led fund.

Other Notable Mentions

K-beauty Fund: The Ministry of SMEs and Startups launched a KRW 40 billion (~$27 million) fund in April 2025 to back K-beauty brands and beauty-tech across the entire cosmetics value chain. Announced in 2024—after Korean cosmetics exports reached $6.8 billion—the K-Beauty Fund is the first beauty-focused fund created through a public-private partnership.

Space Economy Investment Fund: The South Korean government launched a space sector-specific fund—New Space Investment Support—in 2023 to invest in private SMEs and startups. Funded through the government-backed Science and Technology Promotion Fund, it has created two funds with a total corpus of KRW 20.5 billion (~$14.6 million) over the past two years. In March 2025, the Korea AeroSpace Administration (KASA) decided to invest KRW 7 billion (~$5 million) in the "New Space Investment Support" project to boost the space economy.

Science & Technology Innovation Fund: In March 2025, the Korean government established a KRW 1 trillion Science & Technology Innovation Fund to invest in the national strategic technologies. Half of these funds come from Shinhan Bank, Industrial Bank of Korea, and Woori Bank, while the accelerators and VC firms make up the remaining amount. The plan is to operate the fund with KRW 250 billion annually over four years, for a total of KRW 1 trillion. This includes a dedicated account allocating KRW 20 billion annually for four years for quantum startups.

Cross-Border Capital Corridors

Beyond domestic funding, South Korea has strategically built cross-border investment bridges to expand its startup ecosystem's global reach, beginning with Southeast Asia.

East Ventures–SV Investment Joint Fund: Indonesia's East Ventures and Korea's SV Investment have set up a fund with the target corpus of $100 million to invest in early-stage startups in South Korea and Southeast Asia. The two VC firms announced the first close of this fund in February 2025. Launched in October 2023, the fund has the anchor support from Korea Development Bank (KDB) and a global neobank. It writes checks ranging from $1 million to $3 million for Series A and Series B startups that have strong growth potential across both regions.

Seoul Startup Hub Ho Chi Minh: The "Seoul Startup Hub Ho Chi Minh" is the first global outpost launched around 2021 by the Seoul Metropolitan government, providing support to Korean startups seeking to enter Vietnam. This entails an office space, commercialization support, technology exchange with local companies, networking, investment matching, and setting up overseas corporations.

Meanwhile, the Korea Startup Accelerators & Early-Stage Investors Association (KAIA) has set up a branch in Ho Chi Minh City, using it as a landing base to run cross-border IR days and investor meetups—connecting Vietnamese founders with Korean capital and helping Korean startups localize and expand in Vietnam.

Collab with Thailand: Korean accelerator Y&Archer is a key partner in Thailand’s government-run startup program modeled on Korea’s TIPS. Working with Thailand’s National Innovation Agency, Y&ARCHER organizes cross-border IR and market-entry activities—bringing Thai founders to Seoul for investor meetings and supporting Korean startups exploring Thailand.

Clear On-Ramps for Foreign Founders

South Korea has systematically removed barriers for international entrepreneurs, creating multiple pathways for foreign talent to enter and thrive in its startup ecosystem.

K-Startup Grand Challenge (KSGC)

The K-Startup Grand Challenge is one of the most attractive government-backed accelerator programs for foreign founders, globally. In 2025, it marked its 10th anniversary. The program offers substantial benefits for overseas startups, including equity-free grants (up to KRW 950 million), paid travel and living expenses, office space, and proof-of-concepts with major Korean corporations.

Visa Pathways

The Korean government lowered the barriers for foreign entrepreneurs significantly by launching the Startup Korea Special Visa (D-8-4S) last year.

This special visa flipped the script for foreign founders: instead of ticking credential boxes (degrees, academic scores, or residency requirements), it judges startup founders on idea quality, team strength, and a concrete Korea entry plan.

Upon passing this evaluation, successful applicants receive a recommendation letter (now issued by MSS, local governments, and accelerators), which serves as the key to applying for the visa at immigration offices or Korean embassies abroad. This recommendation letter is valid for six months, during which they must apply for the visa and incorporate a company in Korea.

Before this, founders mainly had two routes to enter: OASIS ( D-8-4), a points-heavy path that rewarded credentials (degrees, patents, capital, leases) and often required a prep visa (D-10-2) before incorporation; and the F-1-D Digital Nomad, which allows entrepreneurs to stay in Korea but bars local employment/income.

Infrastructure Support

Global Startup Center (GSC): Opened in 2024, GSC in Seoul serves as a national hub for foreign founders, offering visa guidance, workspace, and company setup/commercialization support. In 2025, Korea expanded inbound programs and visa pathways around the GSC to make market entry easier for global entrepreneurs.

The Korean Advantage

The transformation of South Korea's startup ecosystem from a modest 200 scaleups to over 2,100 in a decade represents more than just numbers—it reflects a coordinated national strategy that combines massive government funding programs designed to leverage private capital, strategic cross-border partnerships that create two-way investment flows, clear pathways for international talent, and a focus on semiconductors, future mobility, AI, robotics and biotech, where Korea has inherent advantages.

This coordinated, systematic approach is what sets Korea apart. This approach is working well, which is why the Korean government is doubling down on the state-backed venture capital.

South Korea will set aside KRW 16.8 trillion (~$12.4 billion) for the Ministry of SMEs and Startups’ 2026 budget. Central to the next year’s startup budget is the Mother Fund, which will be allocated a record $800 million. Half of this fund will be reserved for AI and deep tech startups with the potential to become unicorns.

The country’s ambition is clear—to rise as the world’s top startup hub that produces the next generation of global unicorns in frontier fields such as AI, semiconductors, robotics, and biotech.

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