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Startups in South Korea Decreased by 7.1% in 2022

Photo by Kamal Kant Kosariya / Unsplash

The number of startups in 2022 decreased by 7.1% from the previous year, according to the “Annual Trend of Startups in 2022” released by the Ministry of SMEs and Startups.

The report cites the global recession, caused by high prices, high-interest rates, and high exchange rates, as the main reason for the decrease.

The report highlights several other factors that contributed to the decline in new businesses.

This is due to a change in income tax, requiring people to register their businesses if their annual income from residential rental is below KRW 20 million.

The number of real estate startups decreased significantly by 111,623 (35.2%) compared to the previous year.

However, the report also notes that due to the government’s real estate price hike, real estate startups increased significantly, and their share in the total number of startups increased. However, this share is gradually decreasing.

Broken by the economic sector, the number of startups in wholesale and retail trade, agriculture and forestry, fishing and mining, education, arts, sports, and recreation increased yearly.

This is due to the spreading culture of face-to-face consumption, the rise of eCommerce, the elimination of distances, and the increasing number of farmers.

On the other hand, the number of startups declined in manufacturing, finance and insurance, and construction, which are highly affected by internal and external economic uncertainties such as interest rate hikes, disruptions in global supply chains, and consumer price inflation.

The number of technology-based startups fell 4.3% year over year to 229,000.

This was due to last year’s record high (240,000) base effect and the impact of the internal and external economic recession.

However, the share of technology-based startups increased by 0.5 percentage points year-on-year to 17.4%, the highest ever.

The absolute number of startups was the second highest after last year.

While the decline in the number of startups is worrying, the increase in technology-based startups is a positive sign for the industry’s future.

As the global economy continues to recover from the recession, it remains to be seen how this will impact the startup ecosystem in the coming years.

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