One in Three Startups Fails Within a Year... Only Half Survive in Finance and Insurance Sectors

Statistics Korea Announces 2020 Business Birth and Death Administrative Statistics Results

A view of Gumi Industrial Complex, Gumi-si, Gyeongsangbuk-do. (Photo by Asia Economy DB)

[Sejong=Asia Economy Reporter Moon Chaeseok] It was found that one out of three startups disappeared within less than a year. The one-year survival rate of sole proprietorships was lower than that of corporations. In particular, more than half of the startups in the finance and insurance sectors disappeared within one year.

On the 17th, Statistics Korea announced the results of the 2020 Business Birth and Death Administrative Statistics containing this information. According to the announcement, the number of "active businesses" with sales or regular employees among for-profit companies last year was 6,821,000, an increase of 294,000 (4.5%) compared to the previous year. Corporations increased by 7% to 743,000, and sole proprietorships increased by 4.2% to 6,077,000.

The number of startups was 1,059,000, an increase of 62,000 (6.2%) compared to the previous year. The startup rate rose by 0.2 percentage points during the same period to 15.5%. Corporations increased by 12.3% to 86,000, and sole proprietorships increased by 5.7% to 973,000. The proportion of sole proprietorships among all startups was 91.9%. The proportion of corporations was 8.1%.

Based on 2019, the number of closed businesses was 736,000, an increase of 44,000 (6.4%) compared to the previous year. Corporations increased by 1.1% to 46,000, and sole proprietorships increased by 6.8% to 691,000.

Among active businesses in 2019, the one-year survival rate of startups from 2018 was 64.8%, up 1.1 percentage points from the previous year. The five-year survival rate of startups from 2014 was 32.1%, up 0.9 percentage points.

The one-year survival rate of sole proprietorships was lower than that of corporations. The one-year survival rate was 64.1% for sole proprietorships and 73% for corporations.

By industry, survival rates for both one and five years were highest in electricity, gas, and steam (one year 90.6%, five years 82.1%) and lowest in finance and insurance (one year 54.2%, five years 18.2%).

Last year, the number of high-growth companies with growth over 20% was 4,221, a decrease of 228 (5.1%) compared to the previous year. Among high-growth companies, the number of gazelle companies registered for less than five years was 1,208, a decrease of 37 (3%).

This content was produced with the assistance of AI translation services.