Korea's Venture Firms on Fast Growth Track

Hong Jong-hak (6th from right), minister of SMEs and startups, and venture entrepreneurs resolve to do their best to spearhead innovation-based growth of the Korean economy during a ceremony held at the Pangyo Startup Campus in Seongnam City on Nov. 1

The number of Korean venture companies with annual sales of more than 100 billion won (US$88 million) increased to 572 last year, with total sales reaching 130 trillion won (US$114.4 billion) and average sales reaching 230.5 billion won (US$202.9 million), according to a survey.

The Ministry of SMEs and Startups and the Korea Venture Business Association announced the results of their survey on Nov. 1.

The survey was conducted by analyzing the management performance of the venture companies with more than 100 billion won in sales last year. They were selected from among the 96,623 domestic companies that have received venture confirmation.

According to the survey, the number of venture companies that earned more than 100 billion won in annual sales increased by 59 (11.5 percent) from 513 companies in 2016.

Starting with 68 in 2005, it surpassed 500 in 2016 for the first time and recorded the highest increase in 2017.

The total sales of these venture firms stood at 130 trillion won, up 16.4 percent from a year earlier. The number of companies with sales of more than 1 trillion won has also increased from 4 in 2016 to 11 in 2017.

The increase was attributed to the strong performance of semiconductor and display industries, which benefited venture businesses engaged in these sectors.

The average sales of venture firms in the 100-billion-won club stood at 230.5 billion won, up 15.8 percent from a year earlier. In particular, the growth rate of sales of new venture firms has risen significantly, according to a survey.

The total number of employees at venture firms with more than 100 billion won in sales was 215,862, up 4.1 percent from 207,293 a year ago, and the average number of employees per company increased from 368.8 to 384.1.

The number of so-called "gazelle-type venture companies," which recorded sales growth of more than 20 percent for the past three years, totaled 32 in 2017, up from 28 in 2016.

By investing an average of 5.8 billion won in R&D per company, these companies showed an R&D to sales ratio was 2.5 percent, far higher than the average of large and small businesses. Their exports to total sales ratio amounted to 21.0 percent, suggesting that their growth is driven by overseas expansion.

Among the 100-billion-won companies, 39.3 percent (221) received venture investments, with 57.2 percent of them receiving venture investments in the initial phase (within seven years from foundation).

In particular, the 221 companies that received venture investments have performed well in almost every way compared to the 341 companies that did not receive investments.

The Ministry of SMEs and Startups and the Korea Venture Business Association held an event at the Pangyo Startup Campus in Seongnam City on Nov. 1 to celebrate and promote the innovation of 100 billion-won venture companies and to encourage them to grow into "unicorn" companies.

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