The Ministry of SMEs and Startups announced that the amendment to the Enforcement Decree of the Small and Medium Enterprise Start-up Support Act was approved in a Cabinet meeting on the 4th. This amendment allows entrepreneurs who have previously failed in their business endeavors for earnest reasons to be recognized as startups even if they venture into the same industry again.
Previously, entrepreneurs who restarted a business in the same industry within three years of shutting down (or two years in cases of bankruptcy) were not recognized as startups, which limited their participation in government startup support programs. However, there has been demand to recognize competent individuals who restart in the same industry as startups immediately.
Under the amended decree, entrepreneurs who demonstrate strong recovery capabilities, such as adopting new business models or technologies, will be able to have their business recognized as a startup even if it is in the same industry.
The competence of the re-starting entrepreneur will be assessed based on their previous management and compliance with laws, without incidents like accounting fraud or wrongful terminations. Successful candidates will undergo an in-depth evaluation analyzing the reasons for past failures and future business potential.
The revised decree is set to be implemented in June. Entrepreneurs who pass the in-depth evaluation and are recognized as startups can participate in startup support programs conducted by the government and local governments.
Cho Kyung-won, the Startup Policy Officer of the Ministry, expressed hope that the expansion of re-startup opportunities for competent entrepreneurs would significantly assist those aiming for a comeback. The Ministry plans to continue developing various policies to facilitate smooth re-entry for failed entrepreneurs and establish a sustainable startup ecosystem.