[Asia Exclusive] "Manufacturing, the Backbone of Industry, Overlooked in Ventures... Urgent Need for Support Policies"

617 Ventures with Sales Over 100 Billion KRW... Total Sales 140 Trillion KRW, 4th in Business Rankings
Manufacturing Startup Investment Only 1.5%, Just 11 Pre-Unicorns
Venture Investment Focused on Platforms... Support to Strengthen Manufacturing Venture Capabilities

Kang Sam-gwon, the newly appointed president of the Korea Venture Business Association. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Kim Heeyoon] “The second venture boom is becoming visible through the government's various venture promotion policies and investment activation. To ensure this growth trend continues, we will actively address regulatory issues in new industrial areas such as telemedicine and focus on enhancing the effectiveness of tax benefits for venture companies.”

This was stated by Chairman Kang at the inauguration ceremony held last month on the 25th at the Venture Business Association in Guro-gu, Seoul. He emphasized the role of the association necessary for the sustained second venture boom, which has arrived with the strengthened experience and capabilities accumulated by the government and the private sector.

In fact, the total sales scale of domestic venture companies with annual sales exceeding 100 billion won was confirmed to be 140 trillion won as of the end of 2019, ranking fourth in the business world after Samsung, Hyundai Motor, and SK. Venture companies with sales over 100 billion won also stood out in terms of management performance compared to large, medium-sized, and small enterprises. At the end of 2019, the net profit margin was 5.9%, which is 1.9 times that of large companies (3.1%) and 2.7 times that of small companies (2.2%).

Chairman Kang said, “It has been confirmed that venture companies play a supporting role in our economy in various aspects such as new job creation and sales,” and added, “The association will serve as a platform to improve the business environment and support sustainable growth so that venture companies can grow into 100 billion won sales companies and unicorn companies.”

He also emphasized the importance of manufacturing ventures in the venture ecosystem, which is recently centered on information technology (IT) and platform services. As the CEO of Point Mobile, a manufacturer of industrial personal digital assistants (PDA), Chairman Kang has deep experience and interest in manufacturing ventures.

However, manufacturing ventures and startups are being neglected in investment attraction and government support. According to the domestic startup trend report announced last year by Rocket Punch, a startup recruitment platform, manufacturing startups attracted only 76.3 billion won in investment out of the total startup investment amount of 5.1112 trillion won in 2019, accounting for just 1.49%. Additionally, among the 42 prospective unicorns selected by the Ministry of SMEs and Startups since 2019, platform-based startups accounted for about half (20 companies, 47.6%), while manufacturing-related startups were only 11 companies (26.1%).

Chairman Kang emphasized, “It is a regrettable reality that manufacturing-based startups and ventures are dying out in South Korea, where manufacturing forms the backbone of the industry,” and added, “It is urgent to implement policies that support manufacturing ventures with technologies such as artificial intelligence (AI) and big data, while taking responsibility from investment to nurturing and demand linkage so that these companies can gain competitiveness in the global market.”