KOSI: "Support for Knowledge-Service Startups Must Differ from Manufacturing; Consider Non-Technical Capabilities"

Policy proposals include package-based support and tax benefits for stock options.

An analysis has found that tailored support measures that take a comprehensive approach to non-technical capabilities, such as talent acquisition and customer experience, alongside technology and quality are needed to help knowledge-service startups achieve early growth.

The Korea SMEs and Startups Institute (KOSI) released a report on the 21st titled "Drivers of Early Growth in Knowledge-Service Startups: The Role of Business Capabilities and Policy Directions."

In the report, KOSI analyzed that as the spread of artificial intelligence (AI) has significantly increased productivity and scalability in the knowledge-service sector, business support policies tailored to the sector are needed, distinct from those for manufacturing, which focuses on technological capabilities. Because knowledge-service startups rely primarily on human capital and create value through knowledge, information and platforms, non-technical capabilities such as talent and customer experience are important to their growth, the institute explained.

In a survey of domestic startups on their achievement of business capabilities for early growth, KOSI found that product and service quality ranked highest, at 4.44 out of 5. It was followed by product and service uniqueness (4.43), talent acquisition (4.40), research and development (R&D) investment (4.32), and customer communication (4.16). Securing intellectual property rights ranked lowest, at 4.07.

In manufacturing, by contrast, the capabilities ranked in this order: product and service quality, product and service uniqueness, R&D investment, pricing strategy, and securing intellectual property rights. The achievement levels for capabilities related to technology were relatively high, distinguishing manufacturing from the knowledge-service sector.

For policies to support the early growth of knowledge-service startups, KOSI proposed strengthening comprehensive, package-based support encompassing service design, customer experience, design and standardization; offering a combined compensation system that pairs cost subsidies for recruiting and retaining talent with tax benefits for stock options; and adopting an integrated strategy for intellectual assets (IA) and intellectual property (IP).

Research Fellow Kim Giman said, "We need to build an ecosystem that enables knowledge-service startups to move beyond the founding and early-growth stages and advance to the next stage. It is important to develop and support capability-based strategies for sustainable growth that strengthen companies' self-reliance and improve the efficiency of the capital they have secured."

Meanwhile, the report found that global venture capital investment last year was highest in AI and machine learning, at US$270 billion, followed by the services sector at US$222 billion. Big data and manufacturing ranked third and fourth, respectively.

This content was produced with the assistance of AI translation services.