Sejong, September 22 - The Ministry of SMEs and Startups (Minister LEE Young) released a report on the startup trends in the first half of 2023 (January to June 2023).

In the first half of 2023, online and contactless commerce continued to increase while in-person commerce grew due to easing social distancing measures. Startups were negatively impacted by factors such as the global economic slowdown and the '3 Highs' (high-interest rates, high exchange rates, and high inflation). During the same period last year, there were 696,891 startups recorded, which is 6.5% higher than the current total of 650,504.
* Number of startups in the first half of the year: (2020) 809,599 → (2021) 730,260 → (2022) 695,891 → (2023) 650,504

The significant decline in the number of new companies in the real estate industry due to high-interest rates and downside growth of the industry is considered to be the main reason behind the overall decrease in startup activity during the first half of 2023. Compared to the same period last year, there were 61,616 (47.3%) fewer startups in this industry. Startup activity, excluding real estate, increased 2.9% YoY, with 16,229 more startups in H1 2021 than last year.
*Number of startups excluding the real estate industry in the first half of the year: (2020) 516,789 → (2021) 569,587 → (2022) 565,565 → (2023) 581,794

The rapid rise in real estate prices in 2020 led to an increase in real estate startups, which had a significant impact on the overall startup growth rate. However, the proportion of real estate startups in the overall startup landscape has gradually decreased.
* Real estate industry startups and their proportion in total startups in the first half by year(registrations, %): (2020) 292,810 (36.2) → (2021) 160,673 (22.0) → (2022) 130,326 (18.7) → (2023) 68,710 (10.6)

By industry, after COVID-19 became an epidemic, new startups in the lodging and restaurant industries (18.3% increase) and personal service industries (10.1% increase) expanded year-on-year due to the expansion of in-person businesses.
* Wholesale/Retail Trade (3.4%↑), Electricity/Gas/Air Conditioning (44.6%↑), Educational Services (7.6%↑), Business Facility Management (7.0%↑), Arts, Sports, and Leisure Activities (8.4%↑), Water Supply, Sewerage, and Waste Management (4.7%↑)

The professional, scientific, and technical services, construction, and transportation and warehousing sectors experienced a decline in the number of startups due to high-interest rates, rising raw material costs, a prolonged economic downturn, reduced investment, and declining exports. Specifically, the professional, scientific, and technical services sector saw a decrease of 13.4%, the construction sector decreased by 10.4%, and the transportation and warehousing sector decreased by 10.3%.
* Real Estate Industry (47.3%↓), Manufacturing Industry (11.6%↓), Finance and Insurance Industry (33.4%↓), Information and Communication Industry (3.4%↓), Agriculture/Forestry/Fishing/Mining Industry (5.1%↓), Health/Social Welfare (9.4%↓)

During the first half of 2023, the number of technology-based startups reduced by 4.6%, down to 115,735, when compared to the same period in the previous year.
Nonetheless, the proportion of technology-based startups in the overall startup ecosystem increased by 0.4 percentage points, reaching its highest level ever.
* Technology-Based Startups and Their Proportion in Total Startups in the first half by year(registrations, %): (2020) 116,280 (14.4) → (2021) 122,444 (16.8) → (2022) 121,289 (17.4) → (2023) 115,735 (17.8)

▶ When using these statistics, there are certain things to consider.

It's important to note that startups are calculated using National Tax Service business registration data. However, this method may include some businesses that are not considered startups under laws such as the Support for Small and Medium Enterprise Establishment Act and the Act on Restriction on Special Cases Concerning Taxation. This may include examples of business changes, including conversion of sole proprietorships to corporations, mergers or divisions of existing companies, re-opening the same business after closure, and registering as a residential property rental business operator.
 

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