Yesterday's 21st presidential election resulted in candidate Lee Jae-myung being elected as president. In this newsletter from Decode Law Firm, we aim to examine President-elect Lee Jae-myung's campaign promises related to startups and venture enterprises, and analyze the impact that the new government's policy directions will have on our startup and venture enterprise sectors from legal and practical perspectives.

President-elect Lee Jae-myung's startup-related campaign promises are centered around three key pillars: (1) AI technology-driven innovative growth, (2) market-driven ecosystem development, and (3) establishment of a strategic industry national fund.

1. Leap to Become One of the World's Top 3 AI Powers: Strengthening AI Infrastructure and Investment Foundation

Campaign Promises:

• Creation of 100 Trillion Won AI Investment Ecosystem The government plans to significantly expand the AI sector budget to induce 100 trillion won in private investment. This substantially exceeds the current domestic venture investment scale (approximately 8 trillion won annually), and is expected to dramatically improve the fundraising environment for AI startups.

• Provision of Technology Infrastructure through National AI Data Cluster Construction A national-level AI data cluster equipped with over 50,000 high-performance GPUs will be established to enable startups to utilize high-performance computing resources at low cost. Given that current GPU rental costs reach tens of millions of won per month, this policy could significantly reduce the initial cost burden on AI startups.

• Acceleration of Industry Convergence through the 'AI for All' Initiative The government will promote an 'AI Convergence Industry Activation' policy that integrates AI technology across all industrial sectors. This will support the creation of new business models by promoting AI adoption across all industries including manufacturing, healthcare, finance, and education.

• Strengthening AI Policy Control Tower Policy implementation will be strengthened through activation of the National AI Committee and establishment of a dedicated AI senior secretary office, ensuring consistency in AI-related regulations and support policies.

Implications:

The government's strengthened AI policy is likely to require reform of related regulatory frameworks including the Personal Information Protection Act and the Data 3 Acts. Startups will need to review their compliance systems regarding personal information processing policies and data collection/usage consent procedures when utilizing AI.

2. Venture Investment Market Development and Private-Led Ecosystem Construction

Campaign Promises:

• Paradigm Shift from Government-Led to Market-Led Approach The venture investment market will be fostered through a transition from direct government support to private investment-led methods. This will be pursued in conjunction with the digital transformation of SMEs and the expansion of welfare platforms.

• Creation of Public Value through Social Venture Preferential Policies Priority support will be provided to social ventures and startups that contribute to solving social problems and public interest. This policy reflects the philosophy of providing more opportunities to companies practicing ESG management.

• Easing Startup Entry Barriers through AI-Based Administrative Simplification AI will be introduced to welfare policy applications and various licensing procedures to simplify administrative processes significantly. This aims to activate the startup ecosystem by minimizing administrative burdens in startup establishment and operation processes.

Implications:

The transition to a market-driven ecosystem will ultimately need to be implemented through existing regulatory relaxation, expansion of regulatory sandboxes, and introduction of negative regulatory methods. This could have positive effects in reducing legal uncertainty when startups enter new businesses, with the actual extent of regulatory relaxation depending on how strong the government's initial commitment is.

3. Policy Finance and Strategic Industry Concentrated Investment

Campaign Promises:

• Formation of Large-Scale National Fund with Diverse Participant Involvement A strategic industry national fund will be established with participation from companies, individual investors, government, and various pension funds including the National Pension Service and Government Employees Pension Service. This will secure long-term and stable investment resources to ensure sustainability of startup investments.

• Inducing Private Investment Activation through Expanded Policy Finance and Tax Benefits Various tax benefits including income deductions and capital gains tax exemptions will be provided to investors participating in the national fund to actively encourage private investment participation. Specific benefit levels will be determined through future tax law amendments.

• Concentrated Development of ABCDEF Global Advanced Companies Concentrated investment will be made in companies in national strategic industry sectors including A: AI (Artificial Intelligence), B: Bio, C: Content/Culture, D: Defense/Aerospace, E: Energy, and F: Manufacturing to secure competitive advantages in global markets.

Implications:

Establishment of the national fund will require amendments to the Capital Markets Act and Restriction of Special Taxation Act. Particularly, provisions related to tax benefits are expected to directly impact startup investment activation.

4. Industry-Specific Specialized Support Policies

Campaign Promises:

• Expanded Government Support for Domestic OTT Platform Development Government-level support will be provided for domestic OTT platform development to compete with overseas OTT platforms such as Netflix and Disney Plus. Global competitiveness of the cultural content industry will be strengthened through content production cost support and platform technology development cost support.

• Green Tech Development through Accelerated Renewable Energy Transition The renewable energy industry will be actively fostered to avoid leaving environmental burdens for future generations. Support for startups in renewable energy sectors including solar, wind, and hydrogen will be expanded, and R&D investment for green tech innovation will be increased.

• Establishment of K-Content Overseas Expansion Support System Based on the global success of Korean Wave content, systematic support will be provided for overseas expansion of cultural content startups. Comprehensive overseas expansion packages including overseas marketing cost support, local partnership connections, and intellectual property protection will be provided.

Implications:

Investment in domestic OTT and content businesses, as well as renewable energy businesses that slowed during the previous administration, is expected to expand, providing growth opportunities for related startups.

5. Impact Analysis and Response for Startups

Positive Impacts:

• Revolutionary Improvement of Fundraising Environment The startup investment market will significantly expand through 100 trillion won scale AI investment and national fund establishment. An environment will be created where even early-stage startups can more easily attract investment through government support.

• Dramatic Improvement in Technology Development Infrastructure Accessibility High-cost GPU resources can be utilized at low cost through the national AI data cluster, significantly reducing technology development costs for AI startups.

• Expanded New Business Entry Opportunities through Regulatory Relaxation Regulations encountered when attempting new business models are expected to be relaxed through market-driven ecosystem transition and administrative simplification.

Precautions:

• Strengthened Data Protection and AI Ethics Obligations Legal obligations regarding personal information protection, algorithm transparency, and AI ethics will be strengthened with expanded AI policies. Advance preparation is necessary.

• Increased Demand for Social Value Creation Due to social venture preferential policies, demands for social problem-solving and ESG management beyond simple profit generation will increase.

• Selective Support Centered on Strategic Industries As the national fund focuses on strategic industries, startups outside specific sectors may face relatively limited support opportunities.

Response Strategies:

• Establishing AI Utilization-Related Compliance Systems Personal information processing policies should be reviewed to align with AI utilization, and data collection/usage consent procedures should be clearly established. Methods to ensure algorithm transparency and explainability should also be prepared.

• Building ESG Management Systems and Social Value Measurement Systems should be introduced to measure and report social value creation activities systematically, and sustainable management strategies should be established. Communication channels with stakeholders should also be strengthened.

• Checking and Monitoring Government Support Program Participation Requirements National fund participation requirements and application qualifications for various government support programs should be identified and prepared in advance. Systems should be established for tracking related legislation amendment proposals, monitoring government policy announcements and guidelines, and regularly conducting industry-specific impact analyses.

• Reviewing Investment Attraction and Business Expansion Strategies Comprehensive reviews should be conducted on national fund utilization plans, tax benefit optimization strategy establishment, and possibilities for business expansion into strategic industry sectors.

Conclusion

President-elect Lee Jae-myung's startup policies contain specific and large-scale support measures including 100 trillion won scale AI investment, national data cluster construction, and strategic industry national fund establishment.

While this is expected to bring revolutionary changes to the domestic startup ecosystem, it will simultaneously entail new legal obligations and social responsibilities including data protection, AI ethics, and ESG management.

For successful policy utilization, proactive responses to changing regulatory environments and establishment of sustainable growth strategies through social value creation are necessary.

D.CODE Law Group will provide professional legal services and strategic consulting to help clients effectively utilize new opportunities and minimize risks in the rapidly changing policy environment.

Junghee Cho | Managing Partner jhcho@dcodelaw.com