The Ministry of SMEs and Startups (Minister Oh Young-joo, hereinafter referred to as the Ministry of SMEs and Startups) and the Korea Institute for Startups and Entrepreneurship Development announced the results of the 2022 ‘Startup Status Survey’ on the 16th, which investigates the characteristics of startups (within 7 years of business commencement).
The ‘Startup Status Survey’ is compiled and published annually as nationally approved statistics (No. 142016).
This survey analyzed the entire '2022 Corporate Statistics Register' (SBR, '24.4 released) of Statistics Korea to compile general information such as the number of startups, sales, and number of employees, and investigated a sample (8,031) of startups to compile characteristics.
◆ General status of startup companies
【Number of Companies】 As of 2022, the total number of startups increased by 6.2% year-on-year to 4.829 million, accounting for 60.1% of all small and medium-sized enterprises (8.043 million), and has shown an upward trend for the past three consecutive years.
The number of startups in technology-based industries was 965,000, accounting for 20.0% of all startups, and the number of startups increased year-on-year, mainly in health and social welfare services (↑20.2%), information and communication services (↑14.4%), and professional, scientific, and technical services (↑10.6%). The proportion of technology-based startups has shown an upward trend for the past three consecutive years.
The number of non-technology-based start-ups was 3.865 million, accounting for 80.0% of all start-ups, and the increase was mainly driven by agriculture (↑16.7%), electricity, gas, steam, and air conditioning supply (↑12.4%), and wholesale and retail trade (↑11.0%).
【Number of Employees】 As of 2022, the total number of employees in startups increased by 16.3% year-on-year to 8.515 million (average of 1.8 people), accounting for 44.9% of the total number of employees in small and medium-sized enterprises (18.956 million), and has shown an upward trend for the past three consecutive years.
The number of employees in technology-based startups was 2.578 million (average of 2.7 people), accounting for 30.3% of all employees in startups. The number of employees increased year-on-year in specialized/scientific/technical (↑27.9%), health and social welfare services (↑22.5%), and information and communication (18.8%) industries.
【Sales】 As of 2022, the sales of all startups increased by 7.0% year-on-year to KRW 1,186.1 trillion (average KRW 250 million), accounting for 35.8% of the total sales of small and medium-sized enterprises (KRW 3,309.0 trillion), and has shown an upward trend for the past three consecutive years.
Sales of technology-based startups amounted to KRW 331.4 trillion (an average of KRW 340 million), accounting for 27.9% of all startups. Sales increased year-on-year mainly in the arts, sports, and leisure-related services (↑24.4%), professional, scientific, and technical services (↑13.6%), health and social welfare services (↑13.0%), and education services (↑10.5%).
◆ Current Status of Startup Business Characteristics (Sample Survey)
【Startup Preparation Stage】 The majority of entrepreneurs (83.3%) were found to be challenging themselves to start a business by leveraging their work experience, and the number of re-startups decreased from the previous year to 29.6% (35.4% last year).
Meanwhile, the main obstacle to starting a business was ‘securing funds (50.3%)’, followed by ‘fear of failure (46.0%)’ and ‘lack of entrepreneurial knowledge, ability, and experience (34.7%)’.
【Entrepreneurship Execution Stage】 Entrepreneurs were found to be mainly challenging themselves to start a business for 'greater economic income (65.0%)', and the main reasons for starting a business were 'because it suits my aptitude (49.9%)', 'favorable long-term prospects (22.6%)', and 'free working environment (17.1%)'.
The average amount of funds required by entrepreneurs to start a business decreased from the previous year to KRW 203 million (KRW 285 million the previous year). The largest proportion of funding methods for startups was ‘self-funding (95.1%)’, followed by ‘(non)bank loans (31.3%)’, ‘personal borrowing (11.8%)’, and ‘government loans, guarantees (11.0%)’.
【Startup Growth Stage】 Among the employees by age group in startup companies, those in their 40s accounted for the largest proportion at 31.1%, followed by those in their 50s at 27.0%, those in their 30s at 23.6%, those in their 20s and younger at 9.3%, and those in their 60s and older at 9.0%.
The average assets of startups decreased year-on-year to KRW 480 million (KRW 550 million the previous year), but of this, capital accounted for 39.3% and debt accounted for 60.7%, indicating an increase in the capital ratio year-on-year. Meanwhile, the major profit and loss status showed a slight improvement in indicators overall year-on-year, with operating profit of 5.8%, net profit of 4.9%, and financial expenses of 2.6% compared to sales.
In addition, startups were found to have an average of 3.1 industrial property rights (3.8 last year), a decrease from the previous year, while the proportion of startups with experience in overseas expansion increased from the previous year to 3.1% of all responding companies (2.8% last year).
Kyung-won Cho, Director of Startup Policy at the Ministry of SMEs and Startups, said, “The overall increase in indicators revealed in this startup status survey shows that the startup environment is becoming more active, and this will become a driving force for the continued development of the startup ecosystem and for more startups to achieve innovation in the future.”
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