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The U.S. Central Intelligence Agency's venture-investment model that nurtured American AI data company Palantir is being introduced to South Korea. The government has decided to establish a "Korean In-Q-Tel (IQT)," directly investing in new-security startups in fields such as AI, drones and aerospace and sharing the returns when they succeed.
Through this, the government set a goal of nurturing startups in advanced security fields including AI, drones, aerospace and cybersecurity, aiming to create five new-security firms with corporate value exceeding 1 trillion won and 50 companies with revenue of more than 100 billion won by 2030.
At the "Strategy Meeting for Fostering Future New-Security Innovation Companies" held at the Blue House on the 26th, President Lee Jae-myung stressed, "The modern security environment has shifted to an era of technology security, where technology determines victory or defeat." He added, "The battlefield is expanding infinitely beyond land, sea and air into space, cyber and AI, and advanced private innovation technologies such as cutting-edge semiconductors, drones, robots, satellites and networks have become the key to national security success or failure."
He continued, "To leap beyond being a traditional defense-industry power and become a global new-security power, fostering innovation companies at the national level is more important than anything else."
The core of this is the Korean In-Q-Tel. Modeled on In-Q-Tel, the nonprofit venture capital firm the CIA established in 1999, the government has decided to set it up as a subsidiary of Korea Venture Investment Corp., with the government investing directly. Korea Venture Investment Corp., along with the Ministry of National Defense and the Defense Acquisition Program Administration, will jointly contribute to raise a total of 50 billion won in funds, with plans to secure additional funding over the following four years. The funds raised will be concentrated on supporting early-stage startups in new-security fields. The U.S. In-Q-Tel is also operated with government budget.
The government also plans to use funds invested through the fund-of-funds and defense policy funds to create an investment fund of more than 1 trillion won, and to establish "Korea Strategic Technology Partners (tentative name)," an asset management firm specializing in new-security technology, to secure up to 10 trillion won in investment resources to be channeled into research and development (R&D) and commercialization over the next five years.
President Lee said, "Korea is one of the countries with the highest military tension in the world, but it can turn this crisis into an opportunity for new industrial growth." He added, "We must shift from a hardware weapons system centered on existing large corporations to one centered on innovative technologies and advanced weapons systems."
The government plans to identify and foster target companies in three stages. Companies with technology and experience in strategic fields will be registered in an "Excellent Company Pool," companies with corporate value of more than 30 billion won and the necessary technological capabilities will be designated as "Candidate Companies," and companies with corporate value exceeding 100 billion won and dual-use civilian-military technology will be designated as "Innovation Companies."
It will also build a rapid procurement system to shorten the procurement period for weapons systems incorporating new-security technologies. In the defense field, it will establish an "Advanced Technology-Type Acquisition System" that shortens the initial deployment period of advanced weapons systems to within one year, and in non-defense fields such as aerospace, it will introduce an innovation-promotion contract system that allows rapid contracting and purchasing of innovation companies' technologies and products.
A new-security-only "OTA-type R&D" system will also be established. It plans to provide up to 10 billion won per company over a maximum of five years. OTA is a special contracting system that allows U.S. federal agencies to rapidly contract, demonstrate and purchase innovative technologies and products.
The meeting also raised the need for an R&D culture that tolerates failure. Han Eun-su, CEO of Uconsystem, suggested, "Speed is important, but development that reflects operation and field feedback is important," adding, "Please view the causes of failure as a process of accumulating technology rather than a target for audit."
In response, President Lee said, "If it is a technology the nation needs, wouldn't it be possible for the government to invest through funds or research grants, accept the loss if it fails, but share the equity or returns if it succeeds?" He added, "We should not stop at supporting or lending, but move toward an investment approach that shares the risk together."
The Korea AeroSpace Administration defined space as the "center of new security" and decided to take the lead in the satellite data processing and storage market, while also pursuing in-house development of AI unmanned aircraft and electric and hybrid-powered vertical takeoff and landing aircraft.
The need to strengthen security in the process of developing innovative technologies was also raised. Park Hyun-ju, CEO of security firm Siot, said, "If cybersecurity is not guaranteed, AI could become a new threat rather than national competitiveness," and requested, "Please expand the public security budget to the level of national strategic industries."
The government plans to reflect such industry opinions while forming a pan-governmental task force to establish a legal basis for support and enacting related special laws to build a new defense procurement ecosystem centered on innovation companies.
