Seoul, South Korea - Data from the Ministry of SMEs and Startups reveals contrasting directions in startup trends for the first six months of 2023.
Why it matters:
Startup metrics for the first half of 2023 reveal shifts in various sectors. These numbers can serve as a gauge for the overall economic environment.
The total number of startups fell 6.5 percent yearly, from 696,891 to 650,504. However, the decline was mainly driven by a 47.3 percent drop in the real estate sector.
Excluding the impact of real estate, the total number of new enterprises grew by 2.9 percent year-on-year to 16,229 new enterprises. The sharp decline in real estate can be attributed to high interest rates and industry-specific downturns, initially leading to a rebound in 2020.
However, sectors such as professional, scientific, and technical services experienced a 13.4% decline, primarily due to economic conditions such as high-interest rates and increased material costs.
Similarly, construction transportation and warehousing will decline by 10.4% and 10.3%, respectively. In contrast, the accommodation and food services sector grew by 18.3%.
The number of technology-based startups fell by 4.6% to 115,735.
However, their market share within the startup environment increased by 0.4 percentage points to a new record.
The data, compiled from the National Tax Service's business registrations, may include companies not officially classified as startups under specific regulations.
Still, the startup scene must be insulated from broader economic variables such as interest rates, inflation, and global economic trends.
Observing these fluctuations provides a lens through which to view the more general economic trajectory.