While the number of university-based startups in Korea is rising, technology transfer and funding for subsequent growth fall short of advanced economies, according to a research finding. The report advised that policies are needed to reform university governance related to entrepreneurship and to actively encourage private investment.
The Bank of Korea (BOK) released a report titled "A Plan to Build a Growth Ladder for the Qualitative Transformation of University Startups" on Thursday, presenting these findings.
According to the BOK, university innovation startups have steadily expanded in quantitative terms, supported by government assistance and infrastructure expansion. The number of university startups grew from 987 in 2011 to 2,887 in 2024. The five-year survival rate after founding stood at 74%, far exceeding the Organization for Economic Cooperation and Development (OECD) member average of 45.4%. The number of faculty and staff in charge of entrepreneurship also more than tripled, from 700 in 2011 to 2,200 in 2024, while the number of entrepreneurship-related courses and course completers rose sixfold and threefold, respectively, over the same period.
However, qualitative indicators remain sluggish. The technology transfer rate at Korean universities stands at about 26%, lower than major advanced economies such as the United States (40.9%) and the United Kingdom (61%). In addition, as startups enter the business expansion phase, the rate of cost increase outpaces revenue growth, resulting in an average operating margin of negative 3.3% in the fifth year after founding.
The BOK pointed to the structural problems of Korea's university startups across four stages: business launch, commercialization, scale-up, and follow-on investment and exit. At the business launch stage, it cited institutional constraints within universities. The report noted that faculty performance evaluations are concentrated on academic activities, so entrepreneurial achievements are not sufficiently reflected, and that the leave-of-absence system for student entrepreneurs is of low effectiveness.
At the commercialization stage, the report analyzed that a lack of commercialization capabilities makes it difficult to connect technology to the market. In fact, the proportion of universities and public research institutions that employ patent attorneys is only 16.9%. As a result, the report noted, capabilities for protecting technology rights, valuation, and transaction negotiation are weak, creating a structure in which university technology fails to reach the market.
At the scale-up stage, the report noted that the environment makes it difficult to overcome the "second valley of death" due to failure in securing follow-on funding. At the follow-on investment and exit stage, it pointed out that capital recovery channels are narrow and disadvantageous contract structures are widespread.
According to the BOK, it takes an average of 14.7 years for a Korean university startup to reach an initial public offering (IPO), relatively long compared with startup-leading economies. In addition, various regulations on corporate venture capital (CVC) under general holding companies make it difficult to recover funds before an IPO.
In response, the BOK presented three policy directions for building a growth ladder for university innovation startups: reforming university governance, expanding the public sector's role as a customer, and inducing private investment.
"We should supplement the indicators so that technology transfer and entrepreneurship records are reflected in faculty performance evaluations, and transform the technology licensing offices (TLO) within universities into organizations centered on experts such as patent attorneys," said Kim Tae-kyung, head of department at the BOK Economic Research Institute. He stressed, "It is necessary to build a catalyst-type scale-up investment structure that encourages matching between public funds and private investors, and to introduce a dedicated trading market for university innovation startups within existing unlisted stock distribution platforms, providing a channel to diversify exit routes."
