This week in Seoul, Alberto Onetti of Mind the Bridge unveiled a framework for comparing innovation ecosystems designed to preserve local distinctiveness while enabling cross-country benchmarking. The model, applied to South Korea under the name The Innovation Economy of South Korea, distinguishes between venture-backed startups, scaleups, scalers and innovative SMEs.

What You Need to Know

The methodology structures an innovation economy as a pyramid with four distinct layers: VC-backed startups at the base, scaleups above them and scalers at the top, with a parallel track for innovative SMEs that grow without venture funding. South Korea was chosen as a test case because its innovation ecosystem relies heavily on corporate and government support as well as venture capital. The framework aims to enable standardized comparisons between very different ecosystems without losing local context.

The Pyramid of Innovation

Every innovation ecosystem can be represented as a pyramid, but not all layers carry equal weight. The model starts with venture-backed startups still validating their business models. Above them sit scaleups, companies that have raised more than $1 million in venture capital and shown enough traction to signal maturity. Both layers are measured against the Innovation Ecosystems Life Cycle Curve to gauge where an ecosystem stands.

  • Startups: Venture-backed technology companies still proving their business models.
  • Scaleups: Companies that have raised more than $1 million in VC and show consistent traction.
  • Scalers: Outliers that have broken out of the home market and achieved international scale.
  • Innovative SMEs: Established revenue-generating firms competing on technology without venture funding.

Scalers sit at the very top of the pyramid. A handful of these companies can influence a country's innovation profile more than thousands of early-stage startups, which is why the methodology counts them separately. Alongside this VC-backed stack runs a second population: innovative SMEs. Many of these companies emerge without external funding and only later may raise capital and move upward into the startup layer. Ignoring them, the authors argue, misses a large part of the real economy's innovation capacity.

The Corporate Connection

Supply of tech companies alone does not create economic impact. Demand is represented by corporates, both local and international, that adopt solutions from startups and scaleups. In South Korea, where chaebols and government-backed programs have historically driven innovation, this demand side is especially critical. The framework accounts for how large companies support startup growth through acceleration programs, procurement and partnerships, a factor often missing in Silicon Valley-centric models.

Why This Matters

This methodology changes how policymakers and investors assess ecosystem health. By separating scalers from early-stage companies and including innovative SMEs, it provides a more complete picture of where innovation actually occurs. For South Korea, the model highlights the importance of corporate-led demand and the role of established industrial players in shaping the startup environment. Other countries can use the same framework to identify gaps in their own innovation pipelines, making resource allocation more targeted and effective.