Expanding Local Startups and Investment to Metropolitan Levels
Major AI Transformation for Regional SMEs
The Ministry of SMEs and Startups has announced a comprehensive plan to boost regional ecosystems. The ministry aims to expand local startups and investment to the level of the Seoul metropolitan area, and to support artificial intelligence (AI)-driven innovation and growth for regional manufacturing SMEs. To achieve this, SME policies will be redesigned to focus on the regions, including regional allocation, increased support rates, and expanded region-specific budgets. In addition, inter-ministerial collaboration will be strengthened to build regional innovation ecosystems that integrate business, daily life, and culture.
Hansung Sook, Minister of the Ministry of SMEs and Startups, is briefing on the key contents of the 2026 Ministry of SMEs and Startups work plan at the Ministry of SMEs and Startups building in Sejong on the 17th. Ministry of SMEs and Startups
On the 17th, the Ministry of SMEs and Startups unveiled the key points of its "2026 Ministry of SMEs and Startups Work Report" at the Government Sejong Convention Center. The vision presented by the ministry is to "restore the growth ladder for SMEs, ventures, and small business owners." The main initiatives to achieve this vision include: fostering vibrant small businesses, revitalizing startups and ventures, driving innovation and growth for manufacturing SMEs, and building an ecosystem of fairness and co-prosperity.
The ministry has decided to focus on local startups and the growth of regional business ecosystems. As a result, five regional startup hub cities will be established next year, with the number expanding to ten by 2030. These regional startup hub cities will receive concentrated support, ranging from infrastructure, talent, commercialization, and networking to improved living conditions through inter-ministerial cooperation. To this end, Startup Parks and angel investment hubs will be established in each of the 14 cities and provinces, and new deep-tech-focused startup universities will be designated.
The TIPS program will allocate 50% of its support to regional companies as a priority. Investment requirements will also be relaxed by 50%. TIPS is a program in which private investors identify and invest in innovative companies first, and then the government provides matching research and development (R&D) grants. Hansung Sook, Minister of SMEs and Startups, explained, "TIPS is one of the most important policies for establishing a regional venture investment base, and its role is crucial in promoting private investment in regional innovative companies."
A regional growth fund, designed to prioritize investment in local SMEs and startups, will be created with a total size of 3.5 trillion won by 2030. In particular, at least one dedicated parent fund will be established in each of the 14 non-metropolitan cities and provinces, and incentives will be provided to participating local governments and regional companies. To remove obstacles to local startups, a "Startup One-Stop Support Center" will be fully operational. The current 17 offline support centers in Korea will be expanded overseas next year, including to Silicon Valley in the United States, and an AI-based online one-stop support center will be launched in the first quarter. In addition, a panel of more than 1,600 advisors, including retired executives from large corporations and experienced entrepreneurs, will be formed.
The ministry will also strategically support innovation and growth for regional manufacturing SMEs. The goal is to increase the sales of regional SMEs from the current 982 trillion won to 1,432 trillion won by 2030. To achieve this, a major AI transformation for regional SMEs will be promoted. The core initiative is to build 12,000 smart manufacturing plants by 2030. Next year, the plan includes establishing 430 advanced AI smart factories specialized by process, such as for industrial accident prevention and defect detection; 585 smart factories in sectors where SMEs are strong, such as K-beauty; and 270 collaborative smart factories involving both large corporations like Samsung and Hyundai and SMEs.
The ministry will also foster specialized manufacturing AI companies. Strategic R&D will be pursued to develop manufacturing AI solutions and equipment, and a system will be established to designate outstanding SMEs in smart manufacturing technology as specialized companies after evaluating their AI transformation capabilities. The ministry will also reinforce the growth ladder that enables regional SMEs to become mid-sized enterprises. The "Jump-Up Program" will be expanded to provide packages of commercialization, R&D, and consulting support to 500 companies over three years by 2030.
Additionally, starting next year, the ministry will foster growth-oriented small business owners by identifying 10,000 "local entrepreneurs" led by young people, and nurturing 1,000 of them into "local creators" and other types of local entrepreneurs. The Local Startup Towns will support networking and collaboration, and the proportion of regional support for local startups will be increased to 90%.
Minister Han stated, "If 2025 was a year of overcoming crises and achieving recovery for SMEs and small business owners, from next year we must move toward growth," adding, "The Ministry of SMEs and Startups will do its utmost to restore the growth ladder for SMEs, ventures, and small business owners."
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