The Ministry of SMEs and Startups said on the 25th that a revision to the Enforcement Decree of the Support for Small and Medium Enterprise Establishment Act, which shortens from three years to one year the period during which a business is not recognized as a startup when restarting in the same industry after closing, passed the Cabinet meeting.
Under current law, to prevent duplicate benefits from startup support programs, if a sole proprietor closes and then establishes a sole proprietorship or a corporation in the same industry, the business is recognized as a startup only after three years have passed since closure. During this period, participation in government startup support programs was also not allowed.
However, as the industrial environment rapidly changes with artificial intelligence (AI) and technological convergence, criticism has emerged that the three-year restriction blocks swift retries based on experience. In last year's startup survey, the average preparation period needed to restart in the same industry was 10.8 months.
The Ministry of SMEs and Startups (MSS) shortened the non-recognition period to one year, considering technological development, changes in the startup environment, and the preparation period for restarting. Going forward, even if a business restarts in the same industry after one year from closure, it will be recognized as a startup and may participate in government startup support programs.
The revised decree will take effect next month. Even corporations that began operations before implementation may apply the revised startup recognition criteria as long as seven years have not passed since starting operations.
Cho Kyung-won, startup policy director at the Ministry of SMEs and Startups (MSS), said, "Through this decree revision, we expect to minimize the downtime after failure, invigorate restarts, and foster a virtuous cycle in the startup ecosystem."