Digital technologies are reshaping businesses across South Korea, enabling new business models, supporting advanced industries and accelerating innovation. At the same time, the government is strengthening regulatory frameworks to safeguard personal data, reinforce cybersecurity and govern emerging technologies such as artificial intelligence. South Korea’s approach places strong emphasis on privacy, security and national interests, with prescriptive data protection requirements, controls on sensitive data, extensive cybersecurity obligations and cloud security certification requirements for public-sector workloads. The country is also among the first to introduce a comprehensive national AI framework through the AI Basic Act, which adopts a risk-based approach while establishing additional obligations for high-impact applications.

These regulations will play an important role in shaping the competitiveness of South Korea’s mature and globally connected startup ecosystem. The findings show that compliance costs and regulatory uncertainty are influencing how startups allocate talent and financial resources, develop products and attract investment, with younger and smaller firms often facing the greatest pressures. Drawing on a survey of 500 ecosystem participants—including 350 startups, 100 venture capital firms and 50 incubators—alongside expert interviews and quantitative modelling, this report examines how South Korea’s digital regulatory landscape is affecting startup activity and how different regulatory trajectories could influence firm formation, venture capital investment and employment over the coming decade.

This report is confidential to Digital Prosperity Asia and may not be published or distributed without prior written permission.