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The Impact of COVID-19 on South Korean Startups and Their Adaptation Strategies

Photo by Martin Sanchez / Unsplash

The technology sector is not immune to its impact as the global economy struggles with the ongoing COVID -19 pandemic.

According to the Korea Startup Index 2019, nearly 69% of South Korean startups have experienced a negative impact on their business due to the pandemic.

The leading causes of these impacts were business disruptions due to social distancing, supply chain issues, and specific problems in the industries in which these startups operate.

How COVID-19 affected the business

These factors have led to a decline in revenue for many companies, with half of all startups surveyed reporting a decline in revenue in their home market.

In addition, nearly 39% of startups have seen a customer decline, contributing to the decrease in revenue.

How the customer number changed during the COVID-19 pandemic era.

As a result, experts predict a 30% decline in startup valuations worldwide, with later-stage startups expected to be hit the hardest.

However, South Korean startups have to face these challenges more actively. As of result, many are taking steps to adapt and prepare for the post-pandemic period.

Most startups are diversifying their sales channels, with 31.6% developing virtual sales, marketing, and PR channels.

How the revenue was affected during the COVID-19 pandemic era.

In addition, 21.8% of startups focus on research and development or product improvements to gain a competitive advantage in the market.

The South Korean government is also taking steps to support its startup ecosystem during this difficult time.

The Ministry of SMEs and Startups has increased the budget for the K-Startup Grand Challenge 2020 by 25% compared to last year. The government is also promoting deregulation for new companies entering the market.

While the current market situation may be difficult, it is essential to remember that it is often the darkest before dawn.

By taking proactive steps to adapt and innovate, South Korean startups can position themselves to succeed in the post-pandemic era.

However, it is essential to ensure that the support provided by the government is sustainable to avoid supporting “zombie” startups that cannot survive in the long run.

Please also read.

Seoul Startup Ecosystem size ranks 10th in the world.

Seoul Startup Ecosystem ranks 16th among 280 cities in the globe.

Korean Startup Ecosystem: Mind the Bridge diagnosed it as a scale-up stage.

Seoul Startup Ecosystem Ranks 20th Globally in Startup Genome Report 2020.