South Korean Startup Sector Contracts 4.5% in 2024 Amid Economic Challenges

Sejong, South Korea - The Ministry of SMEs and Startups (MSS) reported that the total number of startups in South Korea was 1,182,905 in 2024, reflecting a 4.5% decrease (55,712 businesses) compared to the previous year.

New business formation has consistently decreased over five years: 1,484,667 in 2020, 1,417,973 in 2021, 1,317,479 in 2022, 1,238,617 in 2023, and 1,182,905 in 2024.

Several sectors experienced growth compared to 2023.

• Personal services increased by 8.0%.
• Professional, scientific, and technical services rose by 2.5%.
• Business facility management grew by 3.0%.
• Water supply, sewage, and waste management saw the highest sectoral increase at 14.8%.
• Finance and insurance services expanded by 4.9%.
• Health and social welfare services increased by 3.9%.
• Electricity, gas, and air rose by 2.2%.
• Transportation and warehousing grew by 0.5%.
• Educational services increased by 0.6%. Agriculture, forestry, fisheries, and mining rose by 0.1%.
• Multiple sectors recorded declines. Information and communication decreased by 9.8%.
• Real estate fell by 8.6%. Accommodation and restaurants declined by 7.7%.
• Wholesale and retail dropped by 7.1%.
• Arts, sports, and leisure contracted by 6.1%, manufacturing decreased by 5.9, and construction fell by 1.7%.

Monthly data showed year-on-year decreases in most months of 2024.

• January recorded 121,183 new startups (14.6% increase).
• February saw 98,207 (-10.2%).
• March had 105,602 (-10.7%).
• April registered 104,899 (3.4% increase).
• May recorded 99,807 (-7.2%).
• June saw 93,062 (-13.9%).
• July had 105,709 (1.2% increase).
• August registered 91,490 (-12.1%).
• September showed 82,631 (-10.1%).
• October had 99,378 (0.01% increase).
• November recorded 90,208 (-12.1%).
• December saw 90,729 (5.9% increase).
• New business formation decreased across most age demographics. Entrepreneurs under 30 declined by 12.9%, and those in their 30s fell by 7.0%.
• The 40s group decreased by 6.0%, and the 50s demographic dropped by 1.3%.
• Only the 60-and-over group showed growth at 4.6%.

Technology-based startups totaled 214,917 in 2024, a 2.9% decrease (6,519 businesses) from 2023.

However, these companies now represent 18.2% of all startups, an increase of 0.3 percentage points from the previous year's 17.9% and a five-year record high proportion.

The percentage of technology-based startups has consistently increased: 15.4% in 2020, 16.9% in 2021, 17.4% in 2022, 17.9% in 2023, and 18.2% in 2024.