In a significant move to foster innovation and economic resilience, the Ministry of SMEs and Startups (MSS) of South Korea has announced a budget allocation of 16.8 trillion won for the fiscal year 2026, marking a 10.5% increase from the previous year. This budget is strategically focused on five key areas: entrepreneurship and venture innovation, the digital and artificial intelligence (AI) transition, support for small businesses, establishment of regional business ecosystems, and the promotion of collaborative growth.
The MSS outlined that a substantial portion of the budget, approximately 4.3 trillion won, will be directed towards enhancing startup and venture initiatives. This funding aims to stimulate innovation and encourage the emergence of new businesses capable of competing in the global market. In addition, 3.7 trillion won will be allocated to facilitate the digital and AI transformation, a critical step in adapting to an evolving economic landscape.
Particularly noteworthy is the emphasis on supporting small businesses, with 5.5 trillion won earmarked for various assistance programs. Among these initiatives is the newly established ‘Re-Challenge Fund,’ which aims to double its support, encouraging entrepreneurs to re-enter the market after setbacks. Moreover, the MSS plans to significantly increase its investment in venture capital through the establishment of a record 1.1 trillion won fund, with a focus on AI and deep tech sectors.
The government aims to nurture at least 50 innovative companies into global unicorns through the introduction of the ‘Unicorn Bridge’ initiative, which will receive an investment of 320 billion won. The ‘Ultra-Gap Startup 1000+ Project’ will also see an expansion, providing financial support to 746 startups in the top ten emerging industries.
Research and development (R&D) funding for small enterprises has been boosted to 2.1 trillion won, reflecting a 45% increase. In particular, the budget for implementing smart factory solutions has surged by 84.9%, now totaling 4.4 trillion won, alongside a new allocation of 990 billion won for the rapid commercialization of AI applications.
Export support measures are also included in the budget, with 1.5 trillion won set aside for the ‘Export Voucher’ program and an additional 30 billion won for nurturing the K-beauty cluster, demonstrating the government’s commitment to enhancing the international competitiveness of South Korean products.
In a bid to safeguard small enterprises, 5.79 trillion won is designated for the ‘Small Business Management Stability Voucher,’ which aims to relieve cost burdens such as utilities and insurance for approximately 230,000 small business owners with an annual revenue of less than 100 million won.
The budget for the issuance of Onnuri gift certificates has been set at 5.5 trillion won, with a significant expansion in the digital gift certificate portion to 4.5 trillion won, underscoring the push towards digitization in commerce.
Additionally, the MSS is launching new initiatives aimed at integrating AI into small businesses, such as the 114 billion won ‘Innovative Small Business AI Utilization Support’ program, which aims to enhance efficiency and reduce operational costs. The ‘K-Small Business Growth’ initiative, which focuses on transforming small businesses into export-ready enterprises, will receive 95 billion won to assist in global market entry.
For regional business ecosystem development, the budget includes the establishment of a ‘Regional Startup Festival’ with a budget of 36 billion won, as well as 266 billion won for nurturing global innovation districts and 969 billion won for supporting leading regional innovation companies.
Lastly, the collaborative growth ecosystem will see a 12.7% increase in funding for large and small business partnerships, with 201 billion won allocated for this purpose. This initiative aims to strengthen the protection of small enterprises’ technologies, provide legal assistance to those affected by technology infringement, and establish a new support system for mergers and acquisitions to facilitate smoother transitions for small business ownership.
In a recent statement, Minister Han Seong-sook emphasized that this budget plan is a result of rigorous financial restructuring aimed at reinvesting resources into genuinely growth-oriented sectors. She reiterated the government’s commitment to supporting small and medium-sized enterprises, ensuring they can navigate challenging economic conditions and achieve sustainable growth.
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