South Korea now ranks among the world’s least failure-averse societies in entrepreneurship. One in four adults plans to start a business within three years, and fear of failure sits at the lowest level among 53 countries surveyed. Yet fresh data on re-start firms tells a more complicated story. Cultural confidence is rising. Capital continuity remains fragile.

Korea’s 2025 GEM Results: High Entrepreneurial Intent, Low Fear of Failure

On February 27, the Korea Institute of Startup & Entrepreneurship Development (KISED) announced the results of the 2025 Global Entrepreneurship Monitor survey. The study, conducted across 53 countries, evaluates national entrepreneurship conditions and public attitudes.

Korea recorded a National Entrepreneurship Context Index score of 5.9 out of 10, ranking 8th globally. The score exceeds the participating country average of 4.8. However, the ranking fell two positions compared to the previous year.

In the adult population survey, 24.6 percent of respondents said they plan to start a business within three years. This marks a 1.9 percentage point increase year on year.

Most notably, only 27.0 percent of individuals who perceive startup opportunities said fear of failure would deter them from launching a business. This is the lowest figure among all participating countries.

Digital adoption among early-stage entrepreneurs also surged. 63.8 percent reported using digital technologies to sell goods or services, a sharp increase compared to the previous year.

On the surface, Korea appears to be normalizing entrepreneurial risk at a societal level.

Re-Entry Reality: Survival Without Scale

Yet separate reporting on re-start companies paints a different picture.

An analysis of 728 firms that received government re-launch support funding in 2020 found that, as of January 2026, 213 had already closed again. Among surviving firms, 347 employ two or fewer people. Taken together, nearly 77 percent of supported firms either shut down or operate effectively as one-person businesses.

Average employment among 977 operating firms that received re-launch support between 2020 and 2021 stands at only three to four workers.

Annual corporate bankruptcy filings reached 2,282 in 2025, with 1,321 corporate rehabilitation applications. However, guarantee-based re-start support programs cover only a small fraction of those cases.

The Korea Credit Guarantee Fund supported 13 re-start firms in 2021. But in 2025, that number fell to four.

Even within government-backed venture capital, re-start founders represent a small share. Of 535 investments made by the Mother Fund under re-start-related programs, only 37 went to firms that had participated in formal re-start support schemes.

Cultural acceptance has improved. But capital transmission remains constrained.

Ministerial Position: Re-Challenge Headquarters Moves into Execution Phase

Meanwhile, at the February 26 meeting of the 2026 Re-Challenge Support Headquarters Steering Committee, the Ministry of SMEs and Startups (MSS) detailed this year’s implementation plan under the re-challenge framework launched in December and previously outlined at the January National Startup Era strategy meeting.

The government confirmed plans to form a KRW 200 billion re-challenge fund. It will also deploy KRW 115 billion through the Re-Challenge Success Package and re-start loan programs to support roughly 750 companies. An additional KRW 5 billion has been allocated exclusively for firms that receive court-approved rehabilitation this year.

Alongside financing measures, the ministry will expand programs designed to shift public perception and improve access to information. These include “Failure Concerts,” a regional-to-national Re-Challenge IR League, community programs for entrepreneurs who have closed and restarted businesses, and the upgrade of the existing re-challenge support website into a dedicated platform offering case studies and closure guidance.

Minister Han Seong-sook stated,

“The Re-Challenge Support Headquarters will record failure not merely as experience but as entrepreneurial achievement, accumulating it as data that becomes an asset for future success.
We will strengthen customized, stage-based support so that entrepreneurs preparing for re-challenge can attempt again, while continuing efforts to improve social perceptions of failure.”

The policy emphasis is clear. The state is attempting to institutionalize second attempts. The framework introduced earlier this year is now entering active deployment

Korea’s Entrepreneurship Restart: Cultural Shift Without Capital Fluidity

The 2025 GEM results confirm that Korea has made measurable progress in social perception. Fear of failure is no longer the dominant psychological barrier.

However, re-entry capital access remains structurally tight.

Guarantee programs remain limited in scale relative to bankruptcy volume. Investment allocation into re-start founders remains modest. The average firm size among re-start beneficiaries remains small.

This suggests a mismatch between cultural reform and financial intermediation.

Globally, mature venture ecosystems often differentiate between social stigma and capital risk pricing. The United States, for example, has normalized repeat entrepreneurship within venture capital circles, even if credit markets remain conservative. Israel’s ecosystem similarly tolerates high failure rates in technology startups.

Korea appears to be moving culturally toward these models. Yet credit evaluation practices, guarantee thresholds, and public-to-private capital handoffs continue to act as filters.

The friction is not psychological. It is structural.

This distinction carries weight when assessing Korea’s position as a venture capital hub within the Asia-Pacific startup ecosystem. A society that increasingly tolerates failure can generate a larger pool of first-time founders. Yet if capital providers remain cautious in backing repeat entrepreneurs, the cycle of reinvestment and cumulative innovation slows.

The implications also extend beyond Korea with clear lessons for emerging ecosystems watching the transition: the changing cultural perception that normalizes failure does not automatically unlock liquidity at the point of re-entry.

What ultimately shapes outcomes are guarantee systems, credit evaluation practices, and the continuity between public funding and private investment. These mechanisms decide whether failure becomes part of an iterative growth process or a final exit from the market.

Testing the KRW 200 Billion Re-Challenge Fund

The newly announced KRW 200 billion re-challenge fund is positioned as a critical financial instrument within Korea’s second-attempt ecosystem. Its real impact, however, will hinge on how it is deployed, how much private capital it can attract alongside public money, and whether re-start firms gain access to sustained follow-on investment.

If the fund functions as catalytic capital that encourages venture investors to participate, re-entry barriers could gradually ease. Capital would begin to circulate rather than stall at the first rehabilitation stage.

Yet if the vehicle operates in isolation, disconnected from guarantee programs and private financing channels, structural scale limits are likely to remain. Public funding alone cannot resolve systemic bottlenecks.

The indicators to watch are clear: five-year survival rates, employment growth within re-start firms, and the share of venture investment directed toward repeat founders.

Social fear has receded. The decisive question now concerns capital continuity.

Key Takeaways on Korea’s Entrepreneurship Restart and Re-Challenge Program 2026

• Korea ranks 8th in the 2025 Global Entrepreneurship Monitor with a NECI score of 5.9, above the global average.
• Only 27.0% of Koreans cite fear of failure as a barrier, the lowest rate among 53 surveyed countries.
• 24.6% of adults plan to start a business within three years.
• Among 728 firms receiving 2020 re-launch funding, 213 closed again; nearly 77% either shut down or remain micro-sized.
• Annual corporate bankruptcies exceed 2,200 cases, yet guarantee-based re-start support remains limited.
• The government plans a KRW 200 billion re-challenge fund and KRW 115 billion in re-start financing for 2026.
• The structural challenge lies not in social stigma, but in credit guarantees, capital continuity, and venture allocation to repeat founders.

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