Local Startup Small Businesses Attract KRW 122.7 Billion in Investment Through "LIPS"

10 Companies Grow into Medium-Sized Businesses

Since 2023, private investment totaling 122.7 billion won has been made in 765 local startup small businesses through LIPS. Under the program, private investment firms designated as operators by the Ministry of SMEs and Startups first invest in local startup small businesses that draw on distinctive local resources, culture, and characteristics. The ministry then provides matching support through policy funding and business development funds.

On the 29th, the ministry announced the findings of its “Trends and Analysis of Private Investment in Local Startup Small Businesses.” The analysis examined investment trends and growth outcomes for local startup small businesses based on performance since the LIPS program was introduced in 2023.

First, the average investment per company through LIPS rose from 117 million won in 2023 to 160 million won this year. The share of companies receiving an initial investment of at least 100 million won also increased, from 43.0% to 57.9%. This shows that private investment in local startup small businesses has grown both in overall scale and in investment amounts.

By business age, mid-stage companies operating for three to seven years accounted for the largest share of investment recipients, with 375 companies (49.0%). Their average business age was 3.6 years. Revenue and employment increased across all business-age groups after receiving support. In particular, early-stage companies recorded high growth rates in revenue (188%) and employment (100%). This suggests that combining private investment with policy support has a positive effect on the growth of early- and mid-stage companies.

By industry, manufacturing ranked first with 321 companies (42%), followed by services with 131 (17%), information and communications with 126 (16%), and wholesale and retail with 125 (16%). While venture investment has traditionally focused on technology, investment in local startup small businesses is spreading across a range of businesses rooted in everyday life, from consumer goods manufacturing such as food and beauty products to household and healthcare services, as well as education and employment-matching platforms. Young business owners in their 20s and 30s accounted for 42.9% of all beneficiary companies, showing that young entrepreneurs are actively pursuing growth with private investment as a springboard.

In addition, of the 765 local startup small businesses that had received investment by August this year, 10 had grown into mid-sized companies. A further 51 companies secured follow-on investments totaling 39.2 billion won. High-growth companies whose revenue grew by at least 20% over three years accounted for 70.7%. The ministry said that companies are beginning to grow their revenue and attract follow-on investment after securing private investment, with some going on to become mid-sized companies.

The 10 companies that grew into mid-sized businesses comprised four food and beverage (F&B) companies, two beauty companies, and four lifestyle companies. Notable examples include Power Player, a beauty company that used investment to develop overseas sales channels in about 40 countries, from Asian markets such as China and Japan to North America; Bean Space, which developed high-quality products such as decaffeinated coffee bean sticks and drip bags and became the exclusive supplier to major coffee franchises; and Andamiro Neulbom, which developed distinctive new products such as black goat momguk and concentrated extracts, achieving revenue growth for three consecutive years and opening a second location.

Among local startup small businesses that secured private investment, average revenue per company increased 43%, from 765 million won to 1.094 billion won. Average employment also rose 31%, from 4.0 people to 5.3 after receiving support. These companies added a total of 646 jobs, suggesting that the benefits of private investment extended beyond revenue growth to job creation.

Private investment in local startups outside the Seoul metropolitan area was also active. By August this year, 298 companies outside the region (38.9% of the total) had secured 58.27 billion won in private investment, accounting for 47.5% of total investment. By industry, the local startup small businesses outside the Seoul metropolitan area that received private investment included 148 manufacturing companies (49.7%), 46 service companies (15.4%), and 41 wholesale and retail companies (13.8%). 

Local startup small businesses that secured private investment also expanded their presence in overseas markets. Both the export participation rate and average exports per company continued to rise. By export value, cosmetics ranked first at 11.7 billion won (45.1%), followed by clothing at 2.9 billion won (11.1%). By number of exporting companies, cosmetics ranked first with 22 companies (20.1%), followed by food with 12 (11.2%). The main export destinations were the United States, Japan, and China, in that order, while overseas sales channels also diversified into Europe, the Middle East, and other regions.

The ministry plans to hold the “2026 LIPS Performance Sharing Event” in conjunction with the “1st Local Startup Festa in Jeju,” which will take place in Jeju from November 4 to 6. Kim Jeongju, the ministry’s director general for small business policy, said, “As global demand for K-consumer goods grows, local startups are showing clear growth and emerging as attractive investment opportunities. The ministry will continue to expand private investment opportunities for promising local small businesses, support their growth, and bring vitality to regional economies.”

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