Study Finds Korea’s AI Startups Lag in Survival, R&D Capacity and Regional Balance (Image courtesy of Yonhap)
SEOUL, Dec. 9 (Korea Bizwire) — South Korean artificial intelligence startups are facing significant challenges, with fewer than six in ten surviving beyond three years, according to a new analysis released Sunday by the Korea Industrial Technology Association.
The report examined more than 38,000 companies with in-house research institutes or dedicated R&D divisions, comparing young startups with general firms. As of 2023, the three-year survival rate for AI startups stood at just 56.2 percent, far below that of other AI-related companies (72.7 percent) and the national industrial average (68.8 percent).
Despite rapid expansion in research spending — rising at an average annual rate of 15.4 percent over three years — AI startups still operate with relatively modest budgets, averaging about 590 million won in R&D expenditures in 2023, a fraction of the spending seen in other sectors.
The study also found that government funding accounts for 22.9 percent of AI startup R&D budgets, nearly four times the national average, underscoring heavy dependence on state subsidies and grants. Analysts cautioned that the funding structure may leave early-stage firms vulnerable to shifts in public policy.
Regional concentration poses an additional structural barrier: 80 to 82 percent of AI-focused companies are clustered in the greater Seoul metropolitan area, accelerating disparities in technological capacity between regions and raising concerns about long-term competitiveness outside the capital.
Go Seo-gon, executive vice chairman of the association, said the country’s ability to compete in global technology markets will depend heavily on whether AI startups can survive and scale. He urged more aggressive R&D support and ecosystem reforms to help domestic innovators secure a leadership position in worldwide AI competition.
Kevin Lee (kevinlee@koreabizwire.com)
