Sources in the goverment have confirmed that a total of around US$1 billion was invested in startups in the first nine months of the year. This represents a 9.5 per cent increase from a year earlier. The number of startups that received investment also increased to 619 from 579 over the same period.

The increase in funding has been attributed to a rise in activity by institutional investors and private venture funds, as well as government investment strategies. It is expected that by the close of 2014, a total of almost US$1.5 billion will have been invested this year.

The government in Korea has been seeking to spark the growth of venture companies and startups as part of its policy to develop a creative economy that is less reliant on the economic might of a small number of large corporations. In a country that has traditionally been risk averse, there are signs that innovative technologies are being developed and that Korean startups will be able to make a meaningful impact on the economy and for job creation. Another likely side-effect of a more innovation driven business environment is enhanced productivity, something that Korea has struggled with.

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The President has also stressed that venture firms and startups should play a key role in this new economic paradigm. Her government will create a fund for tech startups modeled on the successful Israeli Yozma Fund. In addition, the government is setting up innovation centres in each major Korean city, in partnership with Korean large corporates.

The government has also teamed up with ten local venture capitals and accelerators to provide favourable matching funding for startups. Depending on the organisation, either 1:5 or 1:7 matching funding is available under the programme, meaning that by January 2014, up to 50 companies will have received seed investment of around US$600,000.

It remains to be seen if the government’s efforts produce the long-term positive growth in the venture ecosystem that is hoped for.