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

Philip Lee -

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.