South Korea is intensifying support for its artificial intelligence (AI) ecosystem with a major policy finance initiative. Korea Technology Finance Corporation (KIBO) has committed ₩180 billion (approx. US$130 million) in new AI guarantees focus program for 2025, marking a decisive step in bridging financing gaps for startups and strengthening Korea’s competitiveness in the Asia-Pacific deep-tech race.

KIBO Allocates ₩180B to AI Sector Under BoostUp Strategy

On September 11, KIBO announced that it will supply ₩180 billion (~US$130 million) in guarantees for AI-related companies in 2025, with ₩90 billion (~US$65 million) to be executed in the second half of the year.

The measure aligns with the government’s designation of six “growth engines” — AI, Bio, Contents & Culture, Defense, Energy, and Factory — that underpin Korea’s future competitiveness.

The initiative expands KIBO’s BoostUp Strategy, designed to channel targeted financial support into high-growth industries. AI has been singled out as a priority, and the new guarantee program is structured to address capital shortages that hinder early-stage and scaling firms.

Policy Background: Korea’s Six Growth Engines

The Korean government has identified six priority sectors to sustain economic momentum amid intensifying global competition:

• A: Artificial Intelligence (AI)
• B: Bio
• C: Contents & Culture
• D: Defense
• E: Energy
• F: Factory (manufacturing innovation)

KIBO’s AI-focused financing builds on this framework, aiming to strengthen startups developing or adopting frontier technologies. The program follows the May launch of an AI-specific guarantee product, part of efforts to reduce Korea’s gap in global competitiveness and support SMEs in accelerating AI adoption.

Stakeholder Perspective: KIBO’s Role in AI and Startup Growth

Kim Jong-ho, Chairman of KIBO, emphasized the alignment with national policy:

“KIBO is proactively supporting the government’s innovation-led growth strategy through dedicated AI financial products. We will continue to enhance Korea’s technology competitiveness and back the innovation growth of SMEs and startups as a dedicated policy finance institution.”

AI Guarantee Program and Benefits

The dedicated AI guarantee product, “AI·AX Competitiveness Enhancement Preferred Guarantee,” offers tailored incentives to firms developing or applying AI:

• Guarantee coverage increased to a maximum of 95%
• Fee reductions of up to 0.3 percentage points
• Expanded special calculation provisions for SMEs

In addition, the Semiconductor Industry Special Guarantee targets fabless and semiconductor equipment companies, supporting R&D and localization efforts. This program offers up to ₩20 billion per firm, with the same enhanced guarantee ratios and fee reductions.

To ease financing costs, KIBO is also expanding collaboration with commercial banks, while overseas branches will operate guarantees and investment-attraction programs to help firms expand internationally.

Why the AI Guarantee Program Matters for Korea’s Startup Ecosystem

Basically, the program delivers multiple signals for Korea’s startup ecosystem:

• Bridging capital gaps: By improving guarantee ratios and reducing fees, AI firms can access capital more flexibly, a persistent challenge in early-stage deep-tech.
• Public–private synergy: Integration with banks and global market access programs underscores Korea’s hybrid financing model.
• Global competitiveness: With AI investment accelerating in the U.S., China, and Europe, Korea’s initiative positions local startups to compete in frontier technologies and strengthens the pipeline for future unicorns.

The targeted support also extends Korea’s broader strategy to become a venture capital hub in Asia-Pacific, aligning with recent initiatives such as the government’s Fund-of-Funds commitments in AI and deep-tech.

Korea’s Forward-Looking Strategy for Global AI Competitiveness

In the end, KIBO’s ₩180 billion AI guarantee program reflects Korea’s determination to support startups at the intersection of finance and technology policy. By reducing barriers to capital and expanding tailored support, Korea aims to accelerate the growth of AI and semiconductor ventures that can anchor its next wave of global competitiveness.

Not only that but this move also shows global founders and investors that South Korea is reinforcing its role as a policy-driven innovation hub, where strategic finance mechanisms are tightly linked to national growth priorities and opportunities in frontier technology.

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