1,238,617 Startup Companies Last Year... Lowest in the Past 5 Years

6% Decrease Compared to Last Year
Real Estate Industry Down 34% Due to Real Estate Market Slump
Accommodation, Restaurants, and Personal Services Increase

The number of startups last year was the lowest in the past five years. The sluggish real estate market was analyzed as the main factor.

The Ministry of SMEs and Startups announced on the 29th through the '2023 Startup Trends' report that the number of startups last year was counted at 1,238,617, a 6% decrease compared to the previous year.

The decline in startups last year was largely influenced by the sluggish real estate market continuing from 2022 and the global economic slowdown. In the real estate sector, new startups decreased by 34% (79,076) compared to the previous year, but excluding the real estate sector, the number of startups last year was similar to the previous year.

The Ministry of SMEs and Startups explained, "Overall startups increased mainly in face-to-face industries due to the continued growth of online and non-face-to-face related sectors and the lifting of social distancing," adding, "The sluggish real estate market was analyzed as the main factor for the decrease in startups."

By industry, after the declaration of the COVID-19 endemic, production in face-to-face industries expanded, and new startups increased compared to the previous year in accommodation and food services (8.1%↑), electricity, gas, and air (32.7%↑), among others.

The increase in startups in accommodation and food services was influenced by landlords lowering rents for commercial spaces with high vacancy rates due to the sluggish real estate market, as well as the rise in domestic and international travel demand and the expansion of inbound tourists after the endemic. The electricity, gas, and air sector was significantly affected by the expansion of renewable energy demand due to environmental regulations and the growth of the solar power generation industry.

On the other hand, due to reduced investment and export decline caused by domestic and international economic sluggishness, startups decreased in wholesale and retail trade (1.4%↓), construction (8.6%↓), and professional, scientific, and technical services (9.0%↓).

The real estate sector decreased mainly in residential and non-residential building leasing, and the construction sector saw a significant decline in new startups in small-scale housing construction due to ongoing damage from lease fraud and a decrease in multi-family and multi-unit housing transactions. The professional, scientific, and technical services sector experienced a decrease in startups centered on consulting and design industries due to the continued global economic slowdown and reduced investment and demand caused by interest rate hikes.

Last year, the largest share of startups by industry was wholesale and retail trade with 450,194 startups. This was followed by accommodation and food services (169,188), real estate (126,685), personal services (61,951), construction (61,514), transportation and warehousing (61,241), and professional, scientific, and technical services (52,805).

By age group, startups decreased across all age groups, with the 50s age group experiencing the largest decline at 9.1% compared to the previous year. However, excluding the real estate sector, startups increased in all age groups except for those in their 40s (-2.8%↓) and 50s (-1.5%↓).

In 2023, the number of technology-based startups was 221,436, a 3.5% (7,980) decrease compared to the previous year, but the proportion of technology-based startups in total startups rose by 0.5 percentage points compared to the previous year, reaching an all-time high.

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