South Korean startups are rethinking their approach as the overall climate in the country declines. According to the Ministry of Small and Medium-sized Enterprises (SMEs) and Startups, the number of new companies registered fell by seven percent last year. However, that wasn’t the only bad news.
The ministry also noted that the amount of venture investments plummeted by 60.3 percent in the first quarter when compared to the same period last year. Finally, concerns about lingering fallout from the collapse of the United States-based Silicon Valley Bank have put added pressure on the entire startup ecosystem.
This caused South Korean startups to carry out intensive downsizing and restructuring. Zigbang, a leading PropTech player, is expected to slash about 10 percent of its total workforce in addition to pushing out underperforming employees.
A struggling real estate market as well as the acquisition of Samsung SDS Co.’s home Internet-of-Things arm saw the company report an operating loss of KRW37 billion (US$27.5 million) in 2022.
Elsewhere, Korea Bizwire reported that agtech startup Green Labs and fintech company Bank Salad are undergoing top-to-bottom personnel reductions due to management difficulties. The scale of these is unknown at the moment.
Also Interesting: South Korea proptech firm Dongnae raises USD4.1 million for a second time in six months
Interesting Analysis
It’s not a good time for South Korean startups, although this appears to be more of a correction than anything else. For example, Zigbang made some questionable moves in search of growth that saw its losses mount over the past three years. The company is not alone in that regard.
Ultimately, the decline in investment and numbers will only be temporary if recent history is an indicator. History does have a funny way of repeating itself, too. That means the only way to avoid a similar downturn down the road is for the next wave to avoid the same mistakes as those who came before them.
Keep Reading: Yokohama stakes its claim to be East Asia’s tech hub
