The Ministry of SMEs and Startups released a report on the startup trends in the first half of 2023 (January to June 2023).
In the first half of 2023, online and contactless commerce continued to increase while in-person commerce grew due to easing social distancing measures. Startups were negatively impacted by factors such as the global economic slowdown and the ‘3 Highs’ (high-interest rates, high exchange rates, and high inflation). During the same period last year, there were 696,891 startups recorded, which is 6.5% higher than the current total of 650,504.
The significant decline in the number of new companies in the real estate industry due to high-interest rates and downside growth of the industry is considered to be the main reason behind the overall decrease in startup activity during the first half of 2023. Compared to the same period last year, there were 61,616 (47.3%) fewer startups in this industry. Startup activity, excluding real estate, increased 2.9% YoY, with 16,229 more startups in H1 2021 than last year.
The rapid rise in real estate prices in 2020 led to an increase in real estate startups, which had a significant impact on the overall startup growth rate. However, the proportion of real estate startups in the overall startup landscape has gradually decreased.
By industry, after COVID-19 became an epidemic, new startups in the lodging and restaurant industries (18.3% increase) and personal service industries (10.1% increase) expanded year-on-year due to the expansion of in-person businesses.
The professional, scientific, and technical services, construction, and transportation and warehousing sectors experienced a decline in the number of startups due to high-interest rates, rising raw material costs, a prolonged economic downturn, reduced investment, and declining exports. Specifically, the professional, scientific, and technical services sector saw a decrease of 13.4%, the construction sector decreased by 10.4%, and the transportation and warehousing sector decreased by 10.3%.
During the first half of 2023, the number of technology-based startups reduced by 4.6%, down to 115,735, when compared to the same period in the previous year.
Nonetheless, the proportion of technology-based startups in the overall startup ecosystem increased by 0.4 percentage points, reaching its highest level ever.
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