Venture Companies Increase by 45% in 10 Years... Shift from Manufacturing to Service Industries

Venture Association Releases 'Analysis of Changes in Industrial Structure' Report
Service Sector Ventures Double Over 10 Years
Rapid Surge in New Entries for R&D and Wholesale
Shift from Manufacturing-Centered to Technology-Based Service Structure

The number of venture companies has increased by 45% over the past 10 years, while the industrial structure has been rapidly shifting from manufacturing to technology-based service industries.

On July 24, the Korea Venture Business Association published the report "Analysis of Changes in the Industrial Structure of Venture Companies," which analyzes changes in the domestic venture company industrial structure over the past 10 years (2014?2024) and summarizes 10 key characteristics of these changes.

Trend in the Number of Venture Companies Over the Past 10 Years. Korea Venture Business Association

First, the number of domestic venture companies rose from 24,636 in 2014 to 35,857 last year, an increase of 45.6%. The average annual growth rate was 3.8%. By sector, manufacturing saw only a 1.6% average annual increase, while services grew by 7.4% per year on average, leading the overall growth.

The domestic venture ecosystem is undergoing a structural shift from a manufacturing focus to a technology-based service focus, including IT and software. The number of high-tech industry venture companies grew at an average annual rate of 4.0%, outpacing the 3.4% growth rate of general industries. Since 2021, the proportion of high-tech industries among all ventures has surpassed that of general industries.

However, the number of newly established venture companies peaked at 6,079 in 2020 and has declined for four consecutive years, dropping to 4,708 last year. The main reason for this decline is the contraction in new entries within manufacturing. In contrast, the number of new service sector ventures has returned to an upward trend this year.

By sector, research and development services recorded the highest growth rate, with an average annual increase of 19.1% over the past 10 years. In terms of the number of new ventures, research and development services rose dramatically in ranking from 21st to 4th place, while wholesale climbed from 18th to 6th. Specifically, there has been a surge in "management consulting," "medical and pharmaceutical R&D," "cosmetics wholesale," and "medical device wholesale."

Regionally, 66.7% of all venture companies are concentrated in the Seoul metropolitan area (Seoul, Gyeonggi, Incheon), with Seoul (10,898 companies) and Gyeonggi (11,371 companies) serving as the main hubs. The metropolitan area is particularly specialized in IT and broadcasting services, while non-metropolitan regions continue to be specialized in traditional manufacturing such as machinery, automobiles, and metals.

Changes in the top industries by region were also notable. In 2014, manufacturing was the top industry in most regions except for Seoul and Daejeon, but last year, software development became the leading sector in four regions: Busan, Daegu, Gwangju, and Sejong. This indicates that the center of regional venture ecosystems is gradually shifting toward service industries.

Song Byungjun, Chairman of the Korea Venture Business Association, stated, "Venture companies are focused on technology-based industries and are becoming a key growth engine for our economy by creating high value-added industries. However, current venture company support policies and systems are still stuck in the past," adding, "It is necessary to establish a flexible and innovative regulatory environment that aligns with changes in the industrial landscape."

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