'Nearly 2 Million Startup Companies'... "Accounting for 3 Million Jobs and 741 Trillion Won in Sales"

[Asia Economy Reporter Donghyun Choi] It has been revealed that there were approximately 2 million startup companies with less than 7 years of operation as of 2019. These companies created about 3 million jobs and generated sales of 741 trillion KRW.

According to the '2019 Startup Company Survey' announced by the Ministry of SMEs and Startups on the 25th, the number of startup companies as of the end of 2019 was 1,963,000, an increase of 4.7% compared to the previous year. Among them, technology-based industries such as IT and finance numbered 496,000, up 4.5% from the previous year, while non-technology-based industries numbered 67,000, up 4.8%.

Looking at the status of companies by the age group of their representatives, startups with representatives aged 60 and over showed the highest growth rate at 13.1% compared to the previous year. Entrepreneurs aged 20 or younger ranked second with an 11.7% increase.

The proportion of newly established startups within one year was 26%, up 3 percentage points from the previous year. This was followed by 'over 1 year to 2 years' (20%), 'over 2 years to 3 years' (15.3%), and 'over 3 years to 4 years' (12.5%) in descending order.

The total employment in startup companies was 2,984,000, a decrease of 1.9% (57,000 people) compared to the previous year. Among them, total employment in technology-based industries was 1.48 million, down 10,000 from 1.49 million the previous year, while non-technology-based industries employed 1.5 million, down 40,000 from 1.54 million the previous year.

Total sales of startup companies amounted to 741.2 trillion KRW, down 1.1% (8.1 trillion KRW) from 749.3 trillion KRW the previous year. Among these, total sales in technology-based industries were 246.7 trillion KRW, down 4.6 trillion KRW from 251.3 trillion KRW the previous year. Non-technology-based industries recorded 494.5 trillion KRW, down 3.5 trillion KRW from 498 trillion KRW the previous year.

This survey was conducted and analyzed by the Ministry of SMEs and Startups and the Korea Institute of Startup & Entrepreneurship Development from September last year, based on the '2019 Enterprise Statistics Register' (SBR) data released by Statistics Korea at the end of April last year. The general status such as number of companies, years of operation, total sales, and total employment presented earlier was analyzed by a full population survey.

Separately, the Ministry of SMEs and Startups conducted a sample survey on 8,000 startup companies within the population to examine characteristics by growth stages: preparation, execution, and growth.

First, looking at the characteristics in the 'startup preparation stage,' the proportion of startups with prior entrepreneurial experience (re-startups) was 28.8%, similar to 26% the previous year. Among them, 14.2% prepared for startup as a team, while 85.8% started alone. The average number of members in startup teams was 2.6.

The main obstacles cited by startups in the preparation stage (multiple responses allowed) were 'securing funds' at 70.9%, followed by 'fear of failure' (40.1%), 'lack of startup knowledge, skills, and experience' (30.7%), and 'livelihood maintenance' (23.1%).

In the 'startup execution stage,' the main motivations for starting a business (multiple responses allowed) were 'for greater economic income' (50.8%), 'because it suits my aptitude' (39.9%), and 'to contribute to economic and social development' (31.6%).

The average capital required for startup was 301 million KRW, similar to 309 million KRW the previous year. The methods of funding (multiple responses allowed) were led by personal funds at 93.3%, followed by loans (24.6%), private borrowing (14.5%), and government loans and guarantees (2.4%).

In the 'startup growth stage,' the proportion of regular employees among startup companies was 82.9% of the total workforce, maintaining the same level of employment stability as the previous year. Employment by age group was 40s at 34.9%, 50s at 23.9%, and 30s at 21.7%. By education level, high school graduates or below accounted for the largest share at 43.3%, followed by university graduates (40.8%) and junior college graduates (10.6%). By job type, management and administration accounted for 35%, skilled production 18.9%, and general office work 16.9%.

The average assets of startup companies were 510 million KRW (30.2% equity capital and 69.8% liabilities). The operating profit margin relative to sales was 7.5% (average 30 million KRW), financial costs were 2% (7 million KRW), and net profit margin was 4.3% (18 million KRW).

Meanwhile, the Ministry of SMEs and Startups has been conducting and publishing the Startup Company Survey annually since 2013 to understand the status and growth cycle characteristics of startup companies.

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