Representative Proposal of the "Amendment to the Act on Support for Small and Medium Enterprise Startups"
Kwon Hyangyeop, a member of the National Assembly from the Democratic Party of Korea representing Suncheon, Gwangyang, Gokseong, and Gurye in South Jeolla Province, announced on the 31st that she has proposed the "Amendment to the Act on Support for Small and Medium Enterprise Startups" (Youth Restartup Act), which establishes a legal basis to support the reestablishment of businesses by young entrepreneurs.
The current law mandates the implementation of projects to promote startup activity and support the growth and development of startup companies, and stipulates that preferential treatment may be given to prospective young entrepreneurs and youth startup companies in such cases.
Kwon Hyangyeop, Member of the National Assembly.
However, despite these preferential regulations for youth startup companies, there is a lack of substantial legal grounds for effective support to strengthen the safety net for young entrepreneurs. In addition, it has been pointed out that youth startup companies have a lower survival rate compared to middle-aged and older entrepreneurs due to structural disadvantages such as insufficient capital, lack of experience, lack of training, and limited personal networks.
The main purpose of the amendment is to strengthen the safety net for young entrepreneurs and secure growth momentum for youth startup companies by providing a legal basis for the government to prioritize support for the reestablishment of youth startups when promoting business restart support projects.
According to the Ministry of SMEs and Startups, youth startup companies account for 22% of all startups. However, the closure rate for youth startups was 16% in 2019, 14.2% in 2020, 14.2% in 2021, 13.7% in 2022, and 15.7% in 2023, with a five-year average of 14.9%. This is about 5% higher than the overall startup closure rate of 9.6% during the same period.
According to the Korea Small Business Institute, 93.3% of young entrepreneurs aged 29 and under responded that they had "no experience with startup education," which is 13 to 15% higher than other age groups (78-80%). The Korea Small Business Institute analyzed that this lack of startup education experience leads to higher closure rates.
Kwon emphasized, "Youth entrepreneurship is only truly complete in an environment where young people can try again after failure," and added, "We must strengthen the safety net for young entrepreneurs through practical support such as essential restart education and tax and legal counseling for those who are trying again."
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