[Exclusive] 4 Out of 10 Pre-Startup Package Recipients Close Within 5 Years

Five-Year Survival Rate at 59.3% as of 2023
"Need to Consider a Narrow and Deep Support System"

It has been found that four out of ten companies participating in the government’s flagship startup support program, the “Pre-Startup Package,” close their businesses within five years. Although these companies manage to enter the market with the help of government funding, many fail to secure sufficient demand or to monetize their business, ultimately unable to cross the so-called “Death Valley.” This has led to calls for a “narrow and deep” support system that selects and intensively supports more competitive companies.

According to data analyzed by The Asia Business Daily and provided by Assemblyman Kim Woni of the Democratic Party of Korea on December 17, 2025, the five-year survival rate for companies in the Pre-Startup Package program stood at 59.3% as of 2023. The one-year survival rate was relatively high at 93.9%, but this figure dropped sharply to 75.1% after three years and to 60.3% after four years, eventually falling below 60% in the fifth year. This is noticeably lower than the five-year survival rate of 72.2% for all companies participating in government startup support programs. The Pre-Startup Package began as a supplementary budget project in 2018, was formalized in 2019, and has continued for seven years as of this year.

By industry, the survival rate of knowledge-based service sectors such as artificial intelligence (AI) and bio was lower than that of manufacturing over the same period. The one-year survival rates for manufacturing and knowledge-based services were similar at 94.1% and 93.8%, respectively. However, after four years, the survival rates diverged to 65.0% for manufacturing and 56.2% for knowledge-based services, a gap of 8.8 percentage points. Professor Lee Ilhan of Chung-Ang University’s Business Administration Department explained, “Knowledge-based service industries face fewer initial investment burdens, making market entry easier, but if they fail to secure stable demand, their revenue base becomes fragile, leading to critical challenges in the third or fourth year.”

The poor survival rate is attributed to the “broad and shallow” support structure for pre-startup companies. The Pre-Startup Package is a program that provides up to 100 million won in government funding for commercialization activities such as prototype production and market validation, targeting entrepreneurs before formal company establishment. Compared to the Initial Startup Package and Startup Leap Package, the average funding per company is relatively low at 50 million won, while the number of recipients is high at around 890 companies per year. This structure effectively lowers barriers to entry, but it also has clear limitations in ensuring long-term survival.

In particular, the recent introduction of new programs for pre-startup companies, such as “Startup-Focused Universities,” has led to a partial dispersion of the budget for pre-startup and early-stage companies. The budget for the Pre-Startup Package this year is 54.3 billion won, a 63.6% decrease from 149 billion won in 2020 over the past five years.

Experts advise that it is time to actively consider ways to increase the density of support by selecting companies with outstanding technological capabilities and business potential. While the comprehensive value of government support and the risks associated with providing adventurous support to companies that have not yet fully launched their business must be considered, they warn that if the current trend becomes entrenched and institutionalized, it will become even more difficult to correct in the future.

Professor Kim Sangjun of Ewha Womans University’s Business Administration Department stated, “At the early stage, where failure rates are high as with pre-startup companies, it is necessary for the government to select competitive companies and nurture them thoroughly to enrich the ecosystem. For companies that have already reached a certain level of growth, it is more appropriate to foster them through private investors and market mechanisms without government support.”

A startup policy expert emphasized, “With the introduction of various pre-startup tracks in startup support programs in recent years, the budget and number of companies supported by the Pre-Startup Package have continued to shrink. It is necessary to boldly streamline overlapping programs to create strong growth engines that allow competitive participating companies to break through.”