Incubation in Entrepreneurial Ecosystems

15. Korea

Abstract

Korea is a pioneer of the “soft-landing” incubation approach of sending startups to incubators or accelerators in overseas markets in order to build knowledge of the markets and establish local contacts, most notably through the K-Start Centers. Unlike most countries, the Korean government does not provide grants to incubators, but instead supports the incubation system by certifying private accelerators and contracting them to deliver flagship programmes such as the Tech Incubator Programme for Startups (TIPS). The result is a private-sector led incubation system that harnesses the resources and expertise of large corporates and investors to select and support high potential startups and scaleups.

Overview of incubation system

Korea is actively developing its incubation system and entrepreneurial ecosystem in order to enhance its economic resilience and reduce its economic reliance on major conglomerates (World Economic Forum, 2022[1]). As of 2023, there were 461 registered accelerators in Korea, up from 56 in 2017. These can be business support organisations, large corporates, and investment entities, as well as other types of organisation. To become a registered accelerator, entities must meet specific criteria outlined in the Act on Promotion of Venture Investment. This includes having a minimum of two experts and capital of at least KRW 100 million (approximately EUR 62 000). Accelerators distinguish themselves from traditional investors by actively engaging in incubation and hands-on support, allocating 40% of their funds to startups less than three years old.

Seoul is the main hub for Korea’s incubation system, with the city hosting 252 out of the country’s 461 registered accelerators. Startup and investment activity in Korea is also highly concentrated in the capital city. When accelerators are registered in Korea, they must indicate their area of expertise. Out of the 461 accelerators in 2023, 15% and 31% indicated their expertise was in the information and communication technology (ICT) and bio/medical sectors, respectively.

Korea's accelerators adopt a hands-on approach, investing in and incubating startups directly. The cumulative investment by registered accelerators into startups up to 2023 amounts to KRW 1.5 trillion (approximately EUR 1 billion) across 6 240 projects, with the majority dedicated to startups less than three years old. Korean accelerators strategically focus their investments on three sectors – ICT services, distribution/services and bio/medical fields. Collectively, these sectors account for 76.4% of all accelerator investments, underlining their strategic importance in Korea's startup landscape.

A notable feature of Korea’s incubation system is the integration of other government support mechanisms. Registered accelerators function as intermediaries between the government and startups. The government does not provide direct support to accelerators, but instead leverages accelerators’ expertise to identify promising startups and distribute public funding efficiently.

The economic landscape in Korea, characterised by a well-established manufacturing infrastructure, uniquely positions startups for success by facilitating rapid prototyping and scalable operations. “In-house ventures” within Korean conglomerates (often referred to as “chaebols”) inject an additional layer of dynamism into the startup environment and the incubation system. These in-house ventures are startup-like teams within the conglomerates that are incubated internally to develop technologies or services aligned with the companies’ strategic needs. Some of these eventually spin off to become independent startups, while others remain internal.

Major policies for incubation

The Tech Incubator Programme for Startups (TIPS) is a programme designed to identify and nurture the most promising startups with innovative ideas and groundbreaking technologies (Tech Incubator Program for Startups, 2023[2]). The government strategically selects exceptional registered accelerators to be “TIPS operators”, who are responsible for selecting and supporting the startups. The TIPS targets startups in areas with technological innovation that have the potential to contribute to the wider economy and society, such as information technology, biotechnology, and clean energy. The TIPS operators offer a range of supports to startups including investor networking, mentoring, professional support and matching R&D funds. The TIPS operators also invest directly in promising startups, with the government matching this investment in the form of R&D funding in exchange for royalty payments where ventures go on to become successful. Another aspect of the scheme is “TIPS TOWN”, which is a dedicated space where startups can work and collaborate with other startups, investors, and support organisations. For firms that are less than 10 years old, the TIPS programme provides a gateway to various forms of funding, which can reach a cumulative maximum of approximately KRW 3.5 billion. This funding consists of at least KRW 100 million in seed investment, up to KRW 2.3 billion in R&D funds, and a maximum of KRW 1 billion in commercialisation funds. Since its inception in 2013, the TIPS programme has supported 4 454 startups. TIPS operators have invested KRW 1 trillion (approximately USD 663 million) as of May 2026 into these companies, helping to catalyse a total of KRW 20 trillion KRW (approximately USD 13.3 billion) in investment in subsequent funding rounds.

The globalisation of startups has become a policy priority for Korea, with incubators and accelerators playing a critical role in this area. Several programmes have been devised to facilitate the globalisation of startups and the number of firms provided with dedicated internationalisation supports increased from 94 in 2020 to 443 in 2021.

The major programmes to promote the globalisation of Korean startups through incubation are:

• The Global Acceleration programme matches startups with accelerators in other countries, with a focus on the early-stage of internationalisation where startups are assessing their potential for going global. This allows startups to test the viability of their products in overseas markets prior to making significant investments in entering the market. The programme has a budget of approximately KRW 13.7 billion, which is utilised to support local business activities, including market entry initiatives and participation in local acceleration programmes. The firms also receive training to prepare for expanding to the overseas market.

• The K-Startup Centers (KSCs) initiative is a programme targeting startups at a more advanced stage of internationalisation that are fully committed to internationalising. The KSCs host Korean startups in global innovation hubs in other countries, in partnership with local experts and accelerators. The aim is to help Korean startups to internationalise through the provision of physical bases, training and networking opportunities. The KSCs are initiated through government partnerships between Korea and the recipient countries. The selection of destination countries is based on the foreign governments’ commitment to supporting Korean startups along with the host country’s ecosystem and policy direction.

• The Global Corporate Collaboration programme was launched to link startups to leading global firms in their respective field of expertise, providing the startups with potential first customers and access to infrastructures and the host firms with access to innovation. The programme provides funding of up to KRW 200 million (approximately USD 133 000) for new content development, improvement in services, new employment as well as fees that may be incurred during administrative processes such as patenting processes.

• The Global Startup Academy, which was initiated in 2020, aims to foster born-global startups through collaboration with international firms and accelerators. The programme has a budget of KRW 10.8 billion (approximately EUR 6.7 million) and provides assistance to 60 startups. It comprises three components: global education, global incubation and global networking. The global education is conducted by leading international firms such as AWS, Google, Nvidia and Microsoft, who pass on their knowhow and provide customised support for the startups. The global incubation component is conducted by international accelerators such as Techstars, 500 Global, SOSV, Plug&Play and Startup bootcamp. This is supplemented with workshops and networking sessions with investors Global Startup Academy alumni.

The Korean government also operates incubation policies designed to attract high-potential overseas startups. For example, the K-Startup Grand Challenge supports foreigners who want to create a business in Korea. The 40 selected teams will be provided with office space in Korea and receive comprehensive support, including on business partner matching, investment, visa acquisition, and corporate incorporation. The government will also award the top 20 teams at the final Demo Day a total of KRW 380 million (approximately USD 252 000) in prize money, alongside intensive acceleration support to ensure their stable growth in the Korean market.

Conclusions and lessons for other countries

Korea has implemented many innovative and well-funded policies and programmes to support the creation of global startups, with incubation and acceleration initiatives representing an important part of the policy mix in this area. In particular, Korea has been a pioneer in the development of immersive “soft-landing” schemes, where startups have opportunities to learn about and build contacts in target markets, often in partnership with overseas incubators or accelerators.

Unlike in many countries, the government does not provide grants to incubators or accelerators in Korea, instead opting to support them through other channels such as tax incentives and opportunities to execute government-funded projects. Strict selection processes are in place for accelerators to execute landmark support policies such as the TIPS (Tech Incubator Programme for Startups). In addition, there are clear criteria for qualifying as an accelerator that is set out in the Act on Promotion of Venture Investment. This enables the Korean government to strategically leverage the expertise of accelerators to select and support startups with a higher likelihood of success.

Partnerships are a key aspect of Korea’s incubation and acceleration system. In Korea, there are many examples of public-private partnerships that collaboratively operate programmes. This approach leverages the high number of large conglomerates and well-established manufacturing infrastructure that exists in Korea. Tapping into the networks and resources of private partners provides greater research and testing opportunities for Korean startups and helps them to overcome some of the major constraints that can stymie the development of new businesses.

The overall theme that underpins the policy direction in recent years is a shift from government-centric aids to private sector-orientated investment opportunities, especially for scaling up and global expansion. With the increased awareness and a settled pipeline of startups, the government is increasingly relying on the private sector’s expertise while maintaining a strong yet indirect supportive role. To illustrate this point, two of Korea’s major startup support initiatives – TIPS and the Fund of Funds – are both actively managed by the private sector for selecting and screening for startups with high potential. This approach extends to globalisation, where primarily local accelerators or partners of the Korean government programmes select and support Korean startups for their global expansion. While the government continues to both financially and non-financially support to the emergence of new starts, more quality support is directed towards a selected subset through private assistance.

References

[2] Tech Incubator Program for Startups (2023), Joint TIPS, http://www.jointips.or.kr/global/.

[1] World Economic Forum (2022), , https://www.weforum.org/agenda/2022/01/startups-in-south-korea-are-thriving-this-is-why/.