The South Korean government is moving to reshape the country’s startup landscape by launching a “Startup City Development Project” aimed at building ten regional startup hubs beyond the capital region.
The Ministry of SMEs and Startups said on April 24 that the plan was unveiled at a national strategy meeting chaired by Deputy Prime Minister Koo Yun-cheol, outlining a joint government initiative to foster region-based startup cities.
At the core of the project is the creation of an environment where startups can not only be founded, but also scale and remain rooted in their local regions. While past regional startup policies often focused on physical infrastructure or fragmented support programs, the new approach seeks to integrate talent, R&D, investment, commercialization, testing infrastructure and living conditions into a unified city-level ecosystem.
From capital concentration to region-based startup ecosystems
South Korea’s national startup ecosystem and Seoul rank among the global top tier, but major non-capital cities continue to face a significant competitiveness gap. The new policy is designed to address this imbalance.
A “startup city” is defined not simply as a location for launching businesses, but as a regional hub that combines innovation talent from local universities and research institutes, public data and testing infrastructure from government agencies, and state-backed R&D and investment support. The focus extends beyond startup formation to creating conditions that allow companies to remain and grow locally.
The first cities to be designated are those hosting the country’s four major science and technology institutes: Daejeon, Daegu, Gwangju and Ulsan. These will serve as leading models, with six additional cities to be selected later in alignment with regional industries.
Why science institute cities are leading the model
Selecting these four cities reflects a strategy to anchor regional startup ecosystems in advanced talent and research capacity. The institutes provide a concentration of high-level researchers and technological capabilities essential for deep-tech entrepreneurship.
The government plans to designate new “deep-tech startup-focused universities” within these institutions, establish dedicated startup centers, and strengthen collaboration with regional universities. These measures aim to accelerate university-led startups.
Regulatory changes are also notable. Extensions of startup leave and concurrent employment periods, along with the removal of limits on startup-related academic leave, are intended to reduce barriers for faculty and student entrepreneurs. In deep-tech sectors, execution time and access to talent often outweigh the initial idea, making institutional flexibility a key factor.
However, the success of this model will depend on bridging the gap between research and market entry. Turning research outcomes into startups is a different challenge from enabling those startups to secure customers, investment and regulatory validation. The inclusion of public data and testing infrastructure suggests an effort to address this gap.
Linking investment with conditions for long-term settlement
A defining feature of the project is its inclusion of both growth and long-term settlement conditions within a single policy framework. The government plans to introduce commercialization support packages tailored to regional industries and provide incentives, such as reduced cost burdens, for companies relocating to designated cities. Dedicated R&D and TIPS programs for startups will also be expanded.
On the investment side, the government will launch a regional growth fund worth 450 billion won in 2026, with a plan to build subsidiary funds totaling 3.5 trillion won by 2030. Given that access to follow-on investment has been a persistent weakness in regional ecosystems, this funding structure could play a critical role.
Settlement conditions are also addressed. The government will expand co-living spaces, offices and networking facilities using national and public assets. This reflects a recognition that retaining startups requires more than workspace; housing, talent acquisition, community and quality-of-life infrastructure are equally important.
Opportunities and challenges in a local government-led model
The six additional startup cities will be developed under a model in which local governments design region-specific strategies, while the central government provides funding and program support. This approach offers greater flexibility than a centrally designed, one-size-fits-all model, given the diversity of regional industrial bases and institutional networks.
However, it also introduces variability in execution. Differences in local capacity could translate into uneven outcomes. To avoid devolving into competition for central funding, each city will need a clearly defined industrial focus and a growth pathway for its startups—whether in energy, local industries, venture finance, manufacturing, AI, biotech, or mobility.
The government’s plan to establish integrated governance bodies—bringing together universities, research institutes, related organizations and investors—is a constructive step. Fragmented support systems have often limited the effectiveness of existing programs. A unified platform connecting commercialization, investment, R&D and testing could improve usability for startups.
The significance of targeting the five global top-100 cities
The government aims to place five Korean startup cities within the global top 100 ecosystems by 2030. This is less about rankings than about restructuring the country’s startup geography away from a Seoul-centric model toward a multi-hub system.
The outcome will hinge on three factors.
First, whether regional startup cities can attract real investment and talent inflows.
Second, whether tech startups can secure customers and validation opportunities locally.
Third, whether companies can retain their headquarters and core talent in the region as they scale.
The policy is notable in that it addresses all three dimensions. In particular, extending the policy objective from “startup formation” to “long-term settlement” marks a departure from earlier regional initiatives.
Still, the effectiveness of the project will depend on execution. Startup cities must not become another administrative program. Regional industrial strategies, university reforms, private investor participation, regulatory testing speed and living infrastructure must advance in parallel. More important than fiscal support is the credibility of a system where startups can realistically grow within the region.
The Startup City initiative represents both a regional development policy and a structural shift in Korea’s startup ecosystem. If more cities emerge where technology companies can be built and scaled without relocating to Seoul, Korea’s startup competitiveness may come to be judged less by the number of companies and more by the efficiency of their growth and the strength of their ecosystems.
