SEOUL, December 08 (AJP) - Nearly half of South Korean artificial intelligence startups fail to survive beyond three years, underscoring structural weaknesses in funding and commercialization, according to a report released on Monday by the Korea Industrial Technology Association.
The association said the three-year survival rate of AI startups stood at 56.2 percent as of the end of 2023, well below the 72.7 percent survival rate of general AI companies and the 68.8 percent average across all industries.
The report found that AI startups remain highly dependent on external funding, with 22.9 percent of their research and development budgets coming from government grants and subsidies.
“Government grants and subsidies are essential for sustaining AI startup R&D,” the report said, adding that heavy reliance on external capital reflects weak internal financial capacity.
While average R&D spending by AI startups grew at an annual rate of 15.4 percent over the past three years, the amount reached only 590 million won in 2023, lagging behind other industrial sectors.
“Bold R&D support and a stronger innovation ecosystem are needed for our AI startups to build global competitiveness,” said Ko Se-gon, executive vice president of the association.
* This article, published by Aju Business Daily, was translated by AI and edited by AJP.
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