Here is a reality that most Korean startups need to know and understand. Over 30% of all startups set up last year have already gone out of business. These startups set up operations in all kinds of sectors such as e-commerce, health care technology, robotics, AI, logistics, IoT, and etc. Close to 800,000 startups all over the world emerge every year. Yet about half of them go out of business within two years. This is the same for Korea. A report released by Statistics Korea. Since 2013 close to 65% of all startups started then have gone out of business.
So what could be the reason? One of the main reasons is the lack of investors and funding. It is a simple truth that startups that get funded last longer. A startup will have a very difficult time surviving without investments. Another reason is the lack of innovation in many sectors. Another reason could be entrepreneurs are so eager to get into the startup game that they don’t do the proper research and study.
Statistics show that Korean entrepreneurs that fail at their first startup, only 30% end up starting another one. Many will never try again but rather go find jobs with major Korean tech companies like LG or Samsung. They can still do this because most startup entrepreneurs are young with the average age of 28.
Those that have the highest risk of failure were Korean startups that focused on hospitality and food. Next were wholesale and retail, followed by manufacturing and transportation.
On the bright side, if a startup can survive the first two years, the outlook ahead looks very promising.