'Startup Trend Report 2021' Released
65.2% of Founders "Experience Hiring Difficulties"
Key Hiring Factors: "Monetary Compensation" and "Recognition"
"Investment and Fundraising Challenges" Top Concern for Founders
"As large companies competitively raise salaries, it is becoming more difficult for startups. Many talented developers are also leaving for overseas jobs."
"The number of startups has increased, and the salary expectations of talent seem to have risen significantly. Investors will also need to increase their investment amounts accordingly."
Seven out of ten startup founders felt that the manpower shortage worsened compared to last year. Although the startup ecosystem, which had slowed down due to COVID-19 last year, has shifted to a somewhat positive atmosphere, manpower shortages and investment attraction remain challenges to be addressed.
Startup Alliance and Open Survey announced the 'Startup Trend Report 2021' with these findings on the 7th. Since 2014, the two organizations have conducted annual surveys to analyze trends in the startup industry. This year, from August 5 to 19, 164 founders, 250 employees of large companies, 250 startup employees, and 200 job seekers participated in the survey.
◆ Seven out of ten founders say "manpower shortage worsened compared to last year" = This survey asked about the hottest issue in the startup ecosystem, the 'manpower shortage.' As a result, 65.2% of founders reported difficulties in hiring, and 70.1% said the manpower shortage has become more severe than last year.
Founders considered monetary compensation such as salary, stock options, and shining bonuses (40.9%) as the most important factors affecting recruitment. Next were founder/company recognition (26.2%), the vision pursued by the company/founder's philosophy (23.2%), and a horizontal organizational culture (5.5%).
Among employees of large companies, 58.8% responded that they would consider monetary compensation when moving to a startup, which was overwhelming. This was followed by the vision pursued by the company and founder's philosophy (13.6%) and welfare benefits (11.2%). Among respondents who had changed jobs within the last five years, 65.6% of startup employees considered monetary compensation, and 52.1% considered a horizontal organizational culture.
◆ Improvement in social perception of startups... Investment attraction remains a challenge = Founders rated the overall atmosphere of the startup ecosystem this year at 79 points out of 100. This is a significant increase from 71.3 points last year, which was slowed by COVID-19, with the largest increase seen in companies less than one year old.
79.9% of founders predicted that the startup ecosystem atmosphere would improve next year compared to this year. The positive outlook increased by 22.1 percentage points compared to the previous year, indicating enhanced expectations for the future ecosystem overall. This is analyzed to be influenced by social changes in perception toward startups and an increase in successful startup cases.
Despite venture investment amounts increasing every year, attracting investment remains a challenge for the startup ecosystem. Founders identified 'securing base funds/investment activation (38.4%)' as the most urgent issue to improve for the development of the startup ecosystem. Difficulties in funding and attracting investment have been the top concern for founders for three consecutive years since 2019. This was followed by deregulation (34.8%) and securing excellent talent (33.5%). Founders responded that the most difficult aspect when attracting investment was company valuation and recognition (41.5%).
Domestic companies actively supporting startup activities include Naver and Kakao, and public institutions such as the Korea Institute of Startup & Entrepreneurship Development and Seoul Business Agency. When asked about the fastest-growing startups in Korea, Danggeun Market received the highest response rate at 23.8%. This was followed by Viva Republica, which operates Toss (12.8%), Woowa Brothers (4.9%), and Market Kurly (4.9%).
Choi Hang-jip, Center Director of Startup Alliance, said, "Although challenges such as manpower shortages and investment concentration remain, the startup ecosystem, which was stagnant due to COVID-19, is gradually reviving this year. Especially, it is encouraging that a virtuous cycle ecosystem structure among the government, large companies, investors, and startups is taking root, and that social perception is positively changing as successful startup cases like Toss and Danggeun Market increase."
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