Startup Companies Down 6.5% in First Half Amid '3 Highs' Economic Uncertainty

Ministry of SMEs and Startups Announces 2023 First Half Startup Trends
Increase of 16,229 Companies Excluding Real Estate Sector

Startup activity in the first half of this year decreased by 6.5% compared to the same period last year. The ongoing so-called '3 highs'?global economic slowdown, high interest rates, high exchange rates, and high inflation?have negatively impacted the startup market.

On the 14th, the Ministry of SMEs and Startups (Minister Lee Young) announced the '2023 First Half Startup Trends,' which included this information. The number of startups in the first half of this year was recorded at 650,504, a decrease of 45,387 compared to last year. Startups exceeded 800,000 in the first half of 2020 but dropped to around 730,000 the following year, then to 690,000 last year, and have declined for three consecutive years including this year.

One of the main reasons for the decrease in startups in the first half is the sharp decline in new startups in the real estate sector due to high interest rates and a downturn in the real estate market. While real estate startups increased significantly in 2020 due to a surge in real estate prices, the market situation has since changed, leading to a decrease in startups.

Prospective entrepreneurs are receiving startup consultations. Photo by Jang Jin-hyeong aymsdream@

This year, real estate startups also decreased by 61,616 compared to the same period last year, a 47.3% decline. However, although real estate startups had a significant impact on overall startups in 2020, their proportion has gradually decreased. The share was 36.2% in 2020, dropped to 18.7% last year, and further declined to 10.6% this year.

By industry, following the declaration of the COVID-19 endemic, face-to-face sectors expanded production, leading to an increase in new startups in accommodation and food services (up 18.3%) and personal services (up 10.1%) compared to the previous year. Startups also increased in wholesale and retail trade (up 3.4%), electricity, gas, and air (up 44.6%), education services (up 7.6%), business facility management (up 7.0%), arts, sports, and leisure (up 8.4%), and water supply, sewage, and waste management (up 4.7%).

However, due to high interest rates, rising raw material costs, continued domestic and international economic sluggishness leading to reduced investment and decreased exports, startups decreased in professional, scientific, and technical services (down 13.4%), construction (down 10.4%), and transportation and warehousing (down 10.3%). Startups also declined in manufacturing (down 11.6%), finance and insurance (down 33.4%), information and communications (down 3.4%), agriculture, forestry, fisheries, and mining (down 5.1%), and health and social welfare (down 9.4%).

Technology-based startups in the first half totaled 115,735, a 4.6% (5,554) decrease compared to the same period last year. However, the proportion of technology-based startups within total startups is gradually increasing. It was 14.4% in 2020 but rose to 17.8% in the first half of this year. This is a 0.4 percentage point increase compared to the same period last year, marking a record high.

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