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Ministry of SMEs and Startups Releases Results of the 2022 Survey on the Status of Startup Enterprises

FOR IMMEDIATE RELEASE                      
Jan. 20, 2025                                 
                                                
Ministry of SMEs and Startups Releases Results of the 2022 Survey on the Status of Startup Enterprises

SEJONG – On January 16, 2025, the Ministry of SMEs and Startups (MSS) and the Korea Institute of Startup & Entrepreneurship Development (KISED) announced the results of the 2022 Survey on the Status of Startups, which examines the characteristics of businesses in operation for less than seven years.

This survey analyzed the entire dataset from Statistics Korea’s “2022 Statistical Business Registers” (SBR, released in April 2024) to compile general information such as the number of startups, sales revenue, and the number of employees. A sample of 8,031 startups was examined to assess their characteristics.

General information of Startups

▪ 【Number of entities】 As of 2022, the total number of startups increased by 6.2% year-on-year, reaching 4.829 million. This represents 60.1% of all small and medium-sized enterprises (SMEs) in Korea, which total 8.043 million, and highlights a continuous growth trend over the past three years.

The number of technology-based startups stood at 965,000, making up 20.0% of all startups. Compared to 2021, there was a notable increase in startups, particularly in sectors such as health and social welfare services (up 20.2%), information and communications (up 14.4%), and professional, scientific, and technical services (up 10.6%). The share of technology-based startups has shown consistent growth over the past three years.

Non-technology-based startups totaled 3.865 million, accounting for 80.0% of all startups. This growth was primarily driven by sectors such as agriculture (up 16.7%), electricity, gas, steam, and air conditioning supply (up 12.4%), and wholesale and retail trade (up 11.0%).

▪ 【Number of Employees】 As of 2022, the total number of employees in startups increased by 16.3% year-on-year, reaching 8.515 million (an average of 1.8 employees per startup). This accounts for 44.9% of the total number of employees in SMEs (18.956 million) and reflects a continuous growth trend over the last three years.

The number of employees in technology-based startups was 2.578 million (an average of 2.7 employees per startup), making up 30.3% of the total number of employees in all startups. Compared to 2021, the increase in the number of employees was particularly notable in sectors such as professional, scientific, and technical services (up 27.9%), health and social welfare services (up 22.5%), and information and communications (up 18.8%).

▪ 【Sales Revenue】 As of 2022, the total sales revenue of startups increased by 7.0% year-on-year, reaching KRW 1,186.1 trillion (an average of KRW 250 million per startup). This accounts for 35.8% of the total sales revenue of SMEs (KRW 3,309.0 trillion) and reflects a continuous growth trend over the past three years.

The sales revenue of technology-based startups was KRW 331.4 trillion (an average of KRW 340 million per startup), making up 27.9% of the total sales revenue of all startups. Compared to 2021, revenue increases were particularly prominent in sectors such as arts, sports, and leisure services (up 24.4%), professional, scientific, and technical services (up 13.6%), health and social welfare services (up 13.0%), and educational services (up 10.5%).
 
※ Although technology-based startups make up 20.0% of all startups, they account for 30.3% of total employment and 27.9% of sales revenue. This indicates that they outperformed non-technology-based startups in terms of business performance.
 
Classification Number of Businesses Number of Employees Sales Revenue (KRW 1 trillion)
2020 2021 2022 2020 2021 2022 2020 2021 2022
SMEs 7,286,082 7,713,895 8,042,726 17,791,969 18,492,614 18,956,294 2,674.6 3,017.1 3,309.0
  Startups 4,299,673 4,549,158 4,829,665 7,171,330 7,321,542 8,514,549 1,004.2 1,108.8 1,186.1
(59.0%) (59.0%) (60.1%) (40.3%) (39.6%) (44.9%) (37.5%) (36.8%) (35.8%)
  Type of Industry Technology
-based
848,036 902,599 964,893 2,279,287 2,265,738 2,577,896 283.4 315.4 331.4
(19.7%) (19.8%) (20.0%) (31.8%) (30.9%) (30.3%) (28.2%) (28.4%) (27.9%)
Non-technology
-based
3,451,637 3,646,559 3,864,772 4,892,043 5,055,804 5,936,653 720.8 793.4 854.6
(80.3%) (80.2%) (80.0%) (68.2%) (69.1%) (69.7%) (71.8%) (71.6%) (72.1%)

▪ 【Startup Preparation Stage】 The majority of entrepreneurs (83.3%) are leveraging their previous work experience to pursue entrepreneurship. The proportion of those starting a business again, has decreased year-on-year to 29.6% (down from 35.4%).

Meanwhile, the primary obstacles to starting a business were identified as ‘securing funds’ (50.3%), followed by ‘fear of failure’ (46.0%) and ‘lack of knowledge, skills, and experience in entrepreneurship’ (34.7%).

▪ 【Startup Execution Stage】 Entrepreneurs primarily pursue entrepreneurship for ‘greater financial income’ (65.0%), followed by ‘alignment with their aptitudes’ (49.9%), ‘favorable long-term prospects’ (22.6%), and ‘freedom in the work environment’ (17.1%).

The average required capital for entrepreneurs at the time of starting a business is KRW 203 million (down from KRW 285 million), indicating a decrease compared to 2021. Among the methods of financing, ‘personal funds’ accounted for the largest share (95.1%), followed by ‘(non-)bank loans’ (31.3%), ‘peer-to-peer lending’ (11.8%), and ‘government loans and guarantees’ (11.0%).

▪ 【Startup Growth Stage】 The employment distribution in startups by age group shows that individuals in their 40s represent the largest share at 31.1%. This is followed by those in their 50s at 27.0%, in their 30s at 23.6%, under 20 years old at 9.3%, and those over 60 at 9.0%.

The average assets of startups stand at KRW 480 million (down from KRW 550 million), indicating a decrease compared to 2021. However, within this, equity accounted for 39.3% and liabilities for 60.7%, showing a year-on-year increase in equity. Meanwhile, key profit and loss indicators show an operating profit of 5.8% relative to sales, a net profit of 4.9%, and financial costs of 2.6%, reflecting a slight overall improvement than 2021.

In addition, startups hold an average of 3.1 industrial property rights (down from 3.8), indicating a decrease compared to 2021. However, the proportion of startups with international expansion experience has increased to 3.1% of all responding businesses (up from 2.8% in 2021).

CHO Gyeong-won, Director General for Startup Policy, stated, “The overall increase in the indicators shown in this survey suggests that the entrepreneurial environment is becoming more active, and this will serve as a driving force for the continuous development of the startup ecosystem and for more startups to achieve innovation in the future.”