Korean Startup "Funding Difficulties... Considering Overseas Relocation Due to Regulations"

Korea International Trade Association Announces Survey Results Targeting 256 Startups

Source=Korea International Trade Association

[Asia Economy Reporter Kim Pyeonghwa] Six out of ten domestic startups are experiencing difficulties due to funding shortages and increased management costs. Some are even considering relocating overseas due to management challenges caused by various regulations.

On the 20th, the Korea International Trade Association conducted a survey titled ‘Survey on Sustainable Growth and Resolution of Difficulties in the Startup Sector’ targeting 256 domestic startups and announced these results.

In this survey, startups with fewer than 10 employees accounted for the majority (66%), and participants were mainly engaged in manufacturing and service industries in the Information and Communication Technology (ICT) sector (62%). Most respondents (91%) were CEOs or executives.

They cited the biggest challenges faced while managing startups (multiple responses allowed) as ▲funding (66%) ▲increased management costs (61%) ▲reduction in external institutional investment resources (56%) ▲hiring specialized personnel (45%) ▲corporate regulations (22%).

In particular, regarding regulations, 44.1% of respondents said they experience difficulties in business management due to domestic regulations, nearly twice as many as those who answered otherwise (22.3%). One in four companies (25.4%) also said they are considering relocating overseas due to domestic regulations.

Among the regulations encountered during new technology development and commercialization, the most urgent improvements needed were ▲excessive permit systems related to technology demonstration (51.6%) ▲complex entry barriers in registration and permit industries (50.4%) ▲protection of rights of existing businesses (44.9%).

For example, one startup attempted to introduce a new technology for recycling waste plastic using an eco-friendly catalyst-based depolymerization method, but faced setbacks in technology commercialization due to the absence of a separate classification category.

Regarding difficulties in attracting investment, the main issues cited were decreased investment from government and local governments (59.4%) and reduced investment from specialized investment institutions (54.3%). To revitalize investment attraction, respondents said the most necessary measures were expanding investment resources from government and local governments (72.3%) and establishing incentives such as tax benefits (67.6%).

Regarding future management environment prospects, 66.8% of respondents expected conditions to worsen for a considerable period. They anticipated improvement to occur in the second half of 2023 or later (88.3%).

Jung Manki, Vice Chairman of the Korea International Trade Association, emphasized, “Comprehensive regulatory improvements are key to the sustainable growth of the startup sector, which is a core driver of the future economy. It is also necessary for the government to expand resources and provide investment tax benefits to prevent investment in excellent startups from shrinking.”

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