The Seoul Metropolitan Government (SMG) unveiled its special support measures of “three cultivation strategies” to give attention to start-ups as the driving force of the city’s economy in the Post-COVID-19 era. The city has plans to enable promising Seoul-based start-ups to occupy the future market amid the unprecedented crisis and rapid changes in the industry, making a bold investment of KRW 175 billion.
The SMG selected two major strategic industries: the bio-medicine industry and the “untact” (non-face-to-face) industry, including fintech, drones and robots. The SMG also clarified the target beneficiaries as “growing start-ups” that passed through the initial stage after their foundation.
The SMG will select 100 promising start-ups based on its “three cultivation strategies” to provide each selected company with a “growth acceleration package” worth KRW 100 million to help companies accelerate growth, pioneer the market, and apply for patents. A total of 10,000 individuals, or up to 7 engineers per company, will be temporarily supported with wages for five months in order to stabilize the employment of talents developing core technologies.
Additionally, the SMG will prepare the funds with the scale of KRW 115 billion exclusively for growing start-ups. The city will support up to KRW 3 billion to each start-up that is growing so as to prevent its bankruptcy due to the hit of COVID-19.
The SMG announced that it will offer diverse supports for start-ups with enough potential of growth in order to prevent them from collapsing due to the short-term investment or shrinking funds. The SMG will back up those businesses so that they can grow into soon-to-be unicorn companies with enterprise value of over KRW 100 billion, which will then be associated with support from the central government.
√ Soon-to-be Unicorn Company: Company worth over KRW 100 billion that has potential to grow into a unicorn company
※ Unicorn Company: Company worth over KRW 1 trillion (10 companies in South Korea among which 8 is in Seoul as of 2020)
√ History: Introduced in April 2019, currently a total of 27 companies (20 based in Seoul) have been selected (15 additional companies will be selected)
√ Fund: Jump-up funds of KRW 1 trillion for leaping of growing start-ups into unicorn companies
√ Loan: Special loans available up to KRW 10 billion regardless of financial performances such as deficit
The three cultivation strategies include wage support for 10,000 engineers working for start-ups (KRW 50 billion), comprehensive growth acceleration packages worth KRW 100 million for each of 100 promising start-ups, and investment in seizing market opportunities with new funds (KRW 115 billion + α)
1 Wage support for 10,000 engineers working for start-ups (KRW 50 billion)
First, considering the current conditions where 74 percent of global start-ups are laying off employers, the SMG will support the wages of a total of 10,000 engineers working for about 2,000 promising start-up businesses so that it can stabilize the employment in the field of technology and development and vitalize the new recruits.
According to the scale of the company, each of 3-7 workers is able to receive up to KRW 5 million (KRW 1 million per month). The SMG will install the channel exclusively taking responsibility for the funds at the Seoul Business Agency (SBA) as early as in July to distribute the funds as soon as possible.
2 Comprehensive growth promotion package worth KRW 100 million for each of 100 promising start-ups (KRW 10 billion)
Second, the “growth acceleration package” is aimed to offer various tailored support for selected promising start-ups with the potential of growing into a soon-to-be unicorn company (with a corporate value of over KRW 100 billion).
3 New funds exclusively for growing start-ups (KRW 115 billion + α)
Third, the SMG will build new funds and invest in the occupation of opportunities for growing start-ups, preventing the companies with excellent technology from going bankrupt due to the shortage of investment in an unexpected economic crisis. A total of more than KRW 115 billion will be invested based on the investment of KRW 11.5 billion from the city (KRW 1.5 billion from SBA investment funds and KRW 10 billion from innovative entrepreneurship funds) plus the investments from private financial institutions.