For young Koreans, risks heavily outweigh rewards with entrepreneurship

The icons for the smartphone apps DeepSeek and ChatGPT are seen on a smartphone screen on Jan. 28. [AP/YONHAP]

 
While young Chinese are flocking to AI startups, young Koreans are increasingly pursuing “entrepreneurship out of economic necessity,” according to a new survey that has raised concerns over waning entrepreneurial ambition in Korea.
 
The Federation of Korean Industries (FKI) and the JoongAng Ilbo jointly surveyed 2,103 young adults in Korea, the United States, Japan and China — around 500 from each country — to assess perceptions of entrepreneurship among the 20 to 39-year-old demographic in July.
 
 
Only 12.2 percent of Korean respondents said they had ever attempted to start a business, the lowest among the four nations. The figure was 35.1 percent for the United States, 29.4 percent for China and 16.4 percent for Japan.
 
“In China, seeing the success of AI startups like DeepSeek, more people are thinking, ‘I could be next,’” said Wang Jin, a 30-year-old Chinese entrepreneur. “A corporate job is a good experience, but it’s not a lifelong goal — my dream is to build my own business.”
 
In Korea, however, the primary barriers cited were fear of failure at 34.9 percent, preference for job stability at 34 percent and difficulty securing funding at 18.2 percent. Even among those who did start businesses, most focused on low-margin, domestic services like restaurants and retail — with 35.2 percent expressing interest in general service industries.  
 
In contrast, young Americans and Japanese leaned toward knowledge-based sectors like content creation at 26.9 percent and 29.1 percent, respectively, while Chinese youth favored tech-driven fields such as AI and IT at 35.1 percent.
 
“During Covid-19, you could launch a startup with just an idea,” said Nam Dae-il, a business professor at Korea University. “But now investors demand higher technical competence, and inexperienced entrepreneurs are turning to subsistence ventures, mainly within the domestic market.”
 

International students participate in an entrepreneurship program hosted by Kyung Hee University Campus Town in April 2024. [SEOUL METROPOLITAN GOVERNMENT]

 
One Korean entrepreneur in his 30s, who founded an AI-driven cosmetics recommendation platform, recently shut down his business after just a year. “The idea was great, but the gap between the vision and reality was too wide,” he said. “Outsourcing development cost billions of won, and even when I hired developers in Vietnam, they didn’t grasp the concept.”
 
“You need at least some proof of concept to attract investment, but it took about a year just to develop a demo version, and I couldn’t hold on that long,” he said with a sigh.
 
Despite President Lee Jae Myung’s pledge to grow Korea into one of the world’s top four venture powerhouses, youth entrepreneurship continues to contract. According to the Ministry of SMEs and Startups, total new business registrations fell 4.5 percent last year, with those by people under 30 dropping by 12.9 percent — the largest decline among all age groups.
 
“Since late 2022, venture capital has been drying up, and investors now prefer stable ventures with quick returns,” said Na Su-mi, a researcher at the Korea SMEs and Startups Institute.
 
Subsistence entrepreneurship has limited potential for scaling into global firms. Korea’s share of global unicorns — startups valued at over $1 billion — fell from 2.2 percent in 2019 to just 1 percent in 2024, according to CB Insights. The leading sectors for unicorns are IT solutions at 33.6 percent and financial services at 17.8 percent.
 

Students talk to company officials during the company briefing session on April 25. [BANKS FOUNDATION FOR YOUNG ENTREPRENEURS]

 
“Unless we reform the startup ecosystem and foster a tech-friendly environment, individual entrepreneurship won’t translate into economic growth,” said Chung Chul, CRO of FKI and President of the Korea Economic Research Institute.
 
When asked about preferred career paths among six options — conglomerates, SMEs, mid-sized firms, venture companies, startups, public sector and entrepreneurship — Korean youth ranked conglomerates first and public sector jobs second. Entrepreneurship came last.
 
In contrast, American respondents expressed the highest interest in starting businesses. Over half, 55.7 percent, of Korean respondents said they had no interest in launching or even considering a startup. While American and Chinese youth showed strong entrepreneurial ambition, Korean and Japanese respondents leaned toward job security.
 
Oh Min-do, 32, who ran a food delivery startup, said he lost tens of millions of won within a year. “I didn’t understand market analysis, costs or taxes,” he said. “Now I feel like I’m two or three years behind my peers. I’ll never try again.”
 
“Most of my friends want to work for old, stable companies with large workforces,” said Japanese student Hikari Miyanaga, 25.
  

DeepSeek CEO Liang Wenfeng speaks at an industry meeting hosted by Chinese Premier Li Qiang on Jan. 20. [SCREEN CAPTURE]

 
In a related finding, over half, with 54.9 percent, of Korean respondents said they still live with their parents — the only country in the survey with a majority of so-called kangaroo tribe youth. Koreans also had the latest ideal age for financial independence, at 27.9 years, compared to 26.4 in the U.S., 26.8 in Japan and 27.1 in China.
 
Experts cite a lack of entrepreneurial mindset as a key factor. Korea’s average entrepreneurial perception score was 57.6 out of 100 — lower than China’s 61.6 and America’s 67.3.
 
“Young Koreans tend to see entrepreneurship as something only for a select few,” said Kim Young-eun, head of the entrepreneurship center at the FKI. “We need to promote entrepreneurship as a universal value through education, culture and policy.”
 
There were also calls for stronger institutional support for failed entrepreneurs. “Youth founders face disproportionate financial risks after a single failure,” said Han Joseph, a researcher at the Korea Development Institute. “But Korea lacks effective re-employment or second-chance startup programs.”
 
Nam Jung-min, a professor of entrepreneurship at Dankook University, said the responsibility is currently scattered across multiple ministries. “We need clearer and more cohesive policy support,” he said.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY CHOI SUN-EUL, NA SANG-HYEON, KIM SU-MIN [[email protected]]