Promising university startups founded on innovative research and development (R&D) are turning into "zombie firms" because they fail to find a growth ladder in time. According to a Bank of Korea (BOK) report released Wednesday, the number of university startups surged from 987 in 2011 to 2,887 in 2024. Their five-year survival rate after founding reaches 74 percent, far exceeding the Organization for Economic Cooperation and Development (OECD) average of 45.4 percent. On the surface, it appears that a solid foundation for an innovative startup ecosystem has been established, but the reality is hollow. University startups turn to deficit operations in their third year, and by their fifth year their operating profit margin worsens to minus 3.3 percent. Their debt ratio also reaches 159.2 percent, far exceeding the average for small and medium-sized manufacturers (111.2 percent). In other words, at a time when they should be attracting investment and entering a full-fledged growth trajectory, they end up buried in debt and merely surviving.
University startups are precious seeds that can serve as priming water for innovative growth. In the United States, five of the current top 10 companies by market capitalization—Google, Apple, Microsoft (MS), Broadcom, and Meta—began as university startups. In terms of innovative competitiveness, Korean universities are not behind either. Their technological capabilities are so high that, with research funding amounting to only 5 percent of that in the United States, eight of them ranked among the world's top 50 universities in terms of international patent applications. Nevertheless, the reason their technological prowess does not lead to economic results is that startups fail to enter a growth trajectory, blocked by regulations that hinder investment attraction and by structural constraints at universities. Even more regrettable is that, in this process, hard-developed source technologies are abandoned. It is tantamount to extinguishing the spark of future growth that holds infinite potential.
Universities, where excellent human resources and R&D capabilities are concentrated, are the optimal platform for innovative startups. Now that there are plenty of seeds, the key is to create an environment in which those seeds can sprout, take firm root, and bear fruit. Korea must hasten to reinforce the innovative growth ladder by supplementing infrastructure for technology verification, protection, and smooth commercialization, by easing regulations on corporate venture capital (CVC), and by reforming the rigid structures of universities. Only then can the innovation ecosystem come alive and the "grand transformation into a startup nation" declared by President Lee Jae-myung be achieved.
