National startup initiative seeks to boost growth

President Lee Jae-myung convened a national startup strategy meeting and unveiled policies designed to spur a new wave of venture creation and entrepreneurship. The plan calls for building 10 startup cities by 2030 and establishing a 1 trillion won fund to support entrepreneurs seeking to restart after business failure. The initiative aims to shift South Korea from a job-centered economy to a startup-driven one, opening what Lee described as a “national startup era.”

South Korea’s economy cannot depend indefinitely on a narrow set of growth engines such as large export-oriented semiconductor and auto manufacturers. Yet the country’s startup ecosystem still lacks sufficient vitality. In the first half of last year, the number of new startups fell 7.8 percent from a year earlier. According to global research firm CB Insights, only two South Korean companies reached unicorn status, defined as a valuation above 1 trillion won, over the past four years: fabless semiconductor firm Rebellion and K-beauty platform Abley.

Even technology-driven ventures often lose time and capital navigating incumbent market players and outdated entry regulations. That environment must change. Barriers to new industries should move toward a negative regulatory framework that permits all activity except what is explicitly restricted. Step-by-step regulations that tighten as companies grow should be scrapped. Special startup zones that allow entrepreneurs to launch businesses with minimal regulatory friction should also be expanded.

Israel has emerged as a startup powerhouse with per capita income of about $60,000, supported by a risk-tolerant culture often described as “chutzpah” and by the government-backed Yozma Fund, which shares investment risk with private capital. In South Korea, by contrast, a common saying holds that failure in employment affects only the individual, while failure in business affects the entire family. Both the government and the private sector should share more of the investment risk borne by entrepreneurs and help build a venture capital ecosystem that supports sustained growth.

The government plans to identify and support 5,000 prospective founders through an “Everyone’s Startup Project” using an audition-style selection process. Such competitions may draw public attention, but market competition is far more demanding. South Korea’s five-year startup survival rate is 34.7 percent, below the OECD average. Encouraging youth entrepreneurship requires a cultural shift closer to Silicon Valley, where failure is not heavily stigmatized and is widely viewed as part of the learning process. Failed founders often gain practical management insight, and studies show that relaunched companies have a five-year survival rate roughly 2.4 times higher than that of first-time startups. Support systems for second attempts, including retraining programs and restart funds, should be expanded so that failure becomes a platform for future success. Moving toward a startup-driven economy is critical to creating youth employment and overcoming the K-shaped growth divide.