About half of domestic artificial intelligence (AI) startups shut down within three years.
The Korea Industrial Technology Association said on Dec. 8 in a report titled "Analysis of the current status and implications of research and development (R&D) by domestic AI startups" that as of 2023, the three-year survival rate of domestic AI startups was 56.2%, lower than AI general corporations (72.7%) and the all-industry average (68.8%). The report analyzed 38,154 corporations with in-house research institutes and research and development departments, dividing them into startups in their seventh year or less and general corporations.
It was found that government funding accounted for 22.9% of domestic AI startups' research and development (R&D) expenses, four times the all-industry average. Dependence on government grants and subsidies is high.
In particular, the report noted that although the average research and development (R&D) spending of AI startups rose at an average annual rate of 15.4% over three years, expanding the scale of investment, the absolute level remained lower than other corporate groups at 590 million won as of 2023.
The report saw that among AI corporations, 82% of general corporations and 80% of startups are concentrated in the greater Seoul area, rapidly widening regional gaps in AI technological capacity.
Koh Seo-gon, executive vice chairman of the Korea Industrial Technology Association, said, "The outcome of the global hegemony race hinges on securing AI leadership," and added, "The survival of AI startups, which will play a pivotal role in the AI innovation ecosystem, will be directly tied to national competitiveness." He continued, "Bold support for research and development expenses and ecosystem improvements, along with active government support, are needed so that our AI startups can secure an advantage on the global battlefield."