Ironically, South Korea enjoyed a venture boom during the financial crisis in the late 1990s. A substantial amount of corporate bankruptcies and large-scale layoffs in conjunction with increasing internet coverage resulted in a rise in the number of startups. However, there were a few years of recession in the early 2000s struck by the dot-com bubble. Many startup founders feared failure and became reluctant to take risks because of this negative experience. As to this matter, the government and stakeholders at different levels have poured immense support for self-employers to create a more business friendly society. The movements included the establishment of the domestic stock market called KOSDAQ, the enforcement of the Act on Special Measures for Promotion of Venture Businesses, and the development of the venture capital (VC) market.
In less than two decades, a startup ecosystem seems to be sprouting in South Korea. Unicorns, young companies valued at over one billion U.S. dollars, such as Kakao, Coupang, Yello Mobile and L&P Cosmetic have been born in the country. There has also been a constant registration of VC firms for small and medium-sized enterprises. Both public and private funding sources are available for startups. The industries favored by investors over the past few years have been food, travel & accommodation, finance & insurance and business solution, whereas the ICT service sector was the most popular in 2017 alone. A growth of crowdfunding is remarkable as well, largely due to emerging platforms allowing individuals to easily invest in promising businesses.
When it comes to entrepreneurial environment in South Korea, internal market dynamics and physical infrastructure took top spots in the evaluation. Only few entrepreneurs, nevertheless, are optimistic about the current status and outlook of their businesses. The critical challenges facing small and medium-sized business owners are with regard to profitability and financing. In addition, a longitudinal statistic suggests that enterprises without VC investments take longer time until the initial public offerings (IPOs) compared to VC-backed companies. While strengthening the financial opportunities for startups, it would be beneficial for South Korea to complement entrepreneurial training and education programs to enhance the prospective entrepreneurs' confidence in their capabilities.