Japan, South Korea and Taiwan have positioned startups not solely as engines of financial progress however as key pillars of nationwide safety. Robyn Klingler-Vidra and Ramon Pacheco Pardo argue this strategy affords helpful classes for Europe.
In an period of rising geopolitical pressure, financial safety has change into a strategic crucial. Throughout Europe, policymakers are grappling with how one can scale back dependencies on unreliable companions, safe provide chains in important applied sciences – from semiconductors to vitality to biotech – and use industrial coverage to spice up financial competitiveness and innovation.
There are limits on Europe’s specific funding of army functions, possible stemming from considerations about liberal norms and (relatedly) not eager to hasten tit-for-tat army build-ups elsewhere. The query turns into: how one can preserve European values and safety?
Somewhat than China or the US as the fashions to observe, we advise Europe look to Northeast Asia, the place Japan, South Korea and Taiwan have positioned startups not merely as engines of job creation, financial progress and innovation however as pillars of nationwide safety alongside nationwide champion companies. Their approaches provide helpful classes for Europe.
Startups to inject “revolutionary DNA”
One placing characteristic of the Northeast Asian mannequin is the combination of startups into open innovation ecosystems anchored by giant companies. Japan, South Korea and Taiwan are sometimes related to powerhouse companies, like Hyundai, Toyota and TSMC, to call just some.
This layer of commercial energy advantages from a dynamic and more and more institutionalised view of startups as a supply of financial resilience for these lead companies and for the nation. Industrial giants collaborate straight with startups by government-organised initiatives and areas. Initiatives like Japan’s J-Startup programme, South Korea’s Centres for Inventive Financial system & Innovation and Taiwan’s Tech Enviornment embed startup assist into the material of nationwide innovation capabilities. These programmes have endured management modifications, demonstrating that assist for startups has change into a bipartisan, long-term nationwide precedence.
This isn’t the “disruption” narrative of Silicon Valley, the place startups are sometimes portrayed as challengers to incumbents. As an alternative, startups complement the commercial base of massive enterprise by injecting agility, novel concepts and rising applied sciences into mature sectors. From a safety lens, this bolsters nationwide manufacturing capabilities, like subsequent technology shipyards, which have apparent provide chain autonomy advantages.
Europe’s siloes fairly than a complete of system strategy
Europe, in contrast, nonetheless too typically treats startups as peripheral to core financial and safety considerations. European innovation funding mechanisms comparable to Horizon Europe or the European Innovation Council have not often been tied on to safety targets comparable to technological sovereignty or systemic threat mitigation.
The European Funding Financial institution has lifted some limitations on funding in safety and defence, and has even raised defence as a core strategic precedence, nevertheless it nonetheless doesn’t finance weapons or ammunition. Within the period of financial safety and industrial coverage, this strategy places Europe at a drawback in comparison with its friends in North America or Northeast Asia.
A vital distinction from Northeast Asia stems from the truth that EU efforts have a tendency to have interaction giant companies and startups by totally different programmes. Because it stands, the nascent funding for dual-use startups by the European Innovation Council and the TechEU Scale-up Fund targets startups individually from main companies. This misses the “entire of system” strategy that Northeast Asia pursues. We contend that Europe ought to contemplate how its funding in dual-use startups, introduced within the March 2025 defence spending package deal, can contain (and profit) its personal industrial heavyweights, like Airbus, Bosch, Renault and Siemens.
Ukraine’s drone innovation affords an vital counter level. The scrappy, adaptable strategy to drone know-how by a whole bunch of producers has been lauded because the nation’s “strategic edge” and is central to its warfare capabilities. Inputs and insights are drawn throughout many companies, fairly than by siloed venture funding mechanisms emanating from Brussels.
Embracing startups in a dual-use mentality
In Northeast Asia, the social goal of startups – from a governmental perspective – has lengthy been each to ship on home and exterior goals. To spice up job creation, innovation prowess and financial progress in addition to nationwide safety. As such, startups are embedded within the nationwide safety infrastructure. Startups are dual-use in that they contribute to the financial system and society in addition to on the specific Realpolitik stage.
The notion that revolutionary startups contribute to nationwide safety is an concept that’s lengthy entrenched in the USA. The origins of Silicon Valley stem from the WWI crucial of growing radar and different applied sciences. Right now, Silicon Valley’s massive companies, enterprise capitalists and the federal government are once more fuelling a growth in defence tech and American dynamism.
If Europe desires strategic autonomy and to take care of its means to reply successfully to international disruptions, it should likewise view startups not as a distinct segment financial class that’s about job creation, dynamism and self-actualisation, however as central to safeguarding its future and as a part of its wider financial system.
Japan, South Korea and Taiwan provide a blueprint for a way democracies can combine startups into their financial safety methods. They present that sturdy authorities coordination and open innovation with giant companies can enhance nationwide resilience. For Europe, the query is just not whether or not to observe this mannequin, however how rapidly it could actually adapt and implement it. To get there, Europe wants an specific financial safety agenda that features startups and lead companies.
For extra info, see the authors’ accompanying e book, Startup Capitalism: New Approaches to Innovation Methods in East Asia (Cornell College Press, 2025). Robyn Klingler-Vidra shall be talking at an LSE Pageant occasion on 17 June 2025 titled Tech and the way forward for the world financial system.
Be aware: This text offers the views of the authors, not the place of EUROPP – European Politics and Coverage or the London College of Economics. Featured picture credit score: Flying Digicam / Shutterstock.com
