The MSS 2026 budget has been officially announced by South Korea’s Ministry of SMEs and Startups (MSS), marking a major shift toward venture capital and artificial intelligence funding while reducing SME loans. Vice Minister Noh Yong-seok presented the plan at the Government Complex in Seoul, underlining Korea’s ambition to position itself among the world’s top four venture leaders.
The budget for 2026 is set at 16.8449 trillion won, representing a 10.5 percent increase over the 15.961 trillion won allocated in 2025. The growth is centered on three key areas: venture capital investment, AI research and development, and startup support programs. In contrast, SME policy loans and some operational costs are being cut back to increase fiscal efficiency.
Venture Capital Expansion in the MSS 2026 Budget
One of the largest changes in the MSS 2026 budget is the expansion of venture capital funding, which will receive 4.3886 trillion won, a 23.3 percent increase from the previous year. At the center of this push is the Mother Fund, which invests in private venture capital firms. Its allocation has been increased to 1.1 trillion won, with half of the funding directed toward artificial intelligence and deep tech startups.
The Rechallenge Fund, designed to help entrepreneurs restart after failed ventures, has more than doubled to 133.3 billion won. The M&A Fund, which strengthens exit markets and promotes acquisitions, also more than doubled to 125 billion won. Meanwhile, the Unicorn Bridge Project, which helps promising firms transition into unicorns, received 32 billion won.
The Super Gap Startup 1000+ Project will continue to expand, supporting high-potential startups in scaling operations domestically and internationally. Collectively, these initiatives show how the MSS 2026 budget is designed to strengthen South Korea’s venture ecosystem and direct resources toward industries with the highest growth potential.
AI R&D Priorities in the MSS 2026 Budget
Artificial intelligence is another major focus of the MSS 2026 budget, which allocates 2.1955 trillion won to AI-related research and development. This marks a 45 percent increase from the previous year, the largest AI budget allocation to date.
The plan includes 129.9 billion won for public-private technology commercialization and 436.6 billion won for expanding smart factories, representing an 85 percent increase. A new 99 billion won program, the Rapid Commercialization of AI Application Products, has been launched to accelerate AI-driven solutions across industries. This initiative is expected to enhance productivity and foster innovation, especially within manufacturing.
Loan Cuts and Fiscal Rebalancing in the MSS 2026 Budget
While the MSS 2026 budget increases funding for innovation, it also reduces SME policy loans by 400 billion won. This adjustment follows criticism from a government fiscal efficiency meeting, which found that existing loan programs were underperforming.
To balance the cuts, the ministry introduced the AX Sprint preferential track worth 200 billion won. This program ensures funding reaches businesses in critical industries. Vice Minister Noh stated that the restructured spending allows resources to be reinvested in genuine growth sectors, reflecting a deliberate shift in financial priorities.
Small Business and Regional Development in the MSS 2026 Budget
Despite the reduction in loans, the small business support budget will rise slightly by 2.5 percent to 5.5278 trillion won. The Management Stability Voucher program, which subsidizes utilities and communication costs for 2.3 million small businesses with annual sales under 104 million won, has been allocated 579 billion won. The Hope Return Package, which helps reduce closure costs, has increased to 305.6 billion won, with support limits raised to 6 million won.
The regional enterprise ecosystem budget will grow by 4.3 percent to 1.3175 trillion won. Funding for regional key industries has tripled to 96.9 billion won, while a new regional startup festival will connect emerging businesses with investors and support institutions.
Long-Term Goals and Mutual Prosperity
The co-prosperity sector in the MSS 2026 budget has been increased slightly to 572.5 billion won. Technology protection initiatives grew by 47 percent to 5.1 billion won, while a new M&A-based succession program received 850 million won to support smooth company transitions.
Vice Minister Noh highlighted that the MSS 2026 budget represents a strategic restructuring. Less efficient areas have been scaled back, while investment is concentrated in venture funding, artificial intelligence, and next-generation industries with strong growth potential.
Through this budget reorganization, the MSS aims to strengthen South Korea’s startup ecosystem, accelerate AI adoption, and ensure public resources are allocated to sectors with the greatest potential for global competitiveness.
