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[StartupRecipe] The 52-hours workweek will change the rules of startup work culture

#Weekly Funding Overview

[June. 14~ June. 18 ]

The total funds raised by Korean startups of this week is KRW   282.1 billion.

MOTOVMobility11 billionSeries BAltos Ventures, TBT, Korea Development Bank, ID Ventures, Mirae Asset Capital, Nau IB Capital
CarillonLegal tech-Sparklab
NewneekMedia/Content2.5 billionSeries AKakao Ventures, Shinhan Capital
Strum KoreaSaaS700 millionSeedCapstone Partners, Seed angels
PlavLuxury Fashion-SeedFast Ventures, Hashed
Moconstconstruction-HOBAN CONSTRUCTION
Exosphere labsSecurity1 billionPre-Series ADT&Investment, Colopl Next, Korea Science & Technology holdings
DisquietSocial network-SeedMashup Angels
EPKKOT COMPANYAlcohol beverage-Seedccei Gangwon, Sopoong Ventures
MedistreamKorean medicine5.5 billionSeries AKB Investment, Hana Ventures, Shinhan Ventures Investment
YipscellBio/Healthcare12 billionSeries AIntervest, Aju IB Investment, Premier Partners, HB Investment
BillionairesFintech-Seedkimgisa Company
RingleEducation10 billionSeries AMust Asset Management, One Asset managment, Xoloninvest, Moca Ventures
BarogoLast mile delivery55 billion11th Street, CJ Group, LB Investment, YG Investment,
DSRV LABSBlockchain-Samsung Next
TwinnyMobility17 billionSeries BMirae Asset Daewoo, Log Investement, IBK CAPITAL, YG Investment, IGIS Investment Partners, Pentastone Invesment
Whynot MediaMedia/Content-KDDI
Fast FiveCoworking space30 billionAarden Partners, CL Partners, Kakao Investment, Korea Develpoment Bank, TS Invesment, Korea Investment Partners, Atinum Investment
Motion labsWomen healthcare300 millionSeedThe invention lab, Insight Equity Partners
VivawaveBeauty10 billionSeries BMirae Asset Venture Investment, Premier Partners, CJ Olive young
EpopsoftEducation10 billionSeries AAtinum investment, BonAngels Venture Partners

Major Funding

  • Brave Mobile, the operator of the service matching platform Soomgo, raised KRW 32 billion. The company has accumulated an investment of KRW 50 billion. With the investment, they plan to double the number of employees for strategic marketing, service stabilization, and algorithm technology advancement.
  • Cookat, an HMR sales startup that runs the ‘What to eat today?’ community, raised KRW 32 billion investment. Last year’s sales amounted to KRW 39 billion, with 70 food content channels and 34 million subscribers. They are going to accelerate overseas expansion with offline stores.
  • Cloud monitoring service WhaTap Labs closed a KRW 12 billion investment. SaaS service monitoring tool WhaTap collects and analyzes corporate server, application, container status, and performance data on a second-by-second basis to monitor failures and provide notifications. Currently used by over 1,000 companies, it doubles every year.
  • Extriber, the operator of Trip Store, secured KRW 5 billion in investment, having raised KRW 19.7 billion in total. Trip Store provides a comparison service where you can see package tour deals from 30 travel agencies in one place. The company has achieved 4 million downloads in two years and eight months since its launch.

#Trend Analysis

The 52-hour workweek Changes Korean startups Scene

From July, a 52-hour workweek will be introduced at workplaces where more than 5 employees and less than 50 employees work. In order to balance work and life, it is not allowed to exceed the statutory working hours of 40 hours and 12 hours of overtime a week. Since July 2018, the government has made it mandatory for companies with more than 300 employees to implement a 52-hour work system. Companies with 50 to 299 employees get a one-year grace period, but companies with less than 5 to 49 employees will be introduced immediately from July without a grace period.

Although the intention to pursue a work-life balance is good, many say that the 52-hour system will become an obstacle to the growth of small and medium-sized enterprises and startups. In particular, SMEs in the traditional manufacturing sector are expected to suffer harshly. Manufacturing is classified as an avoidable industry because of its high work intensity and exposure to dangerous environments. If it changes from 2 shifts to 3 shifts due to the 52-hour system, it will be in trouble to find new workers.

Even for startups, the 52-hour system is a threat to growth. Currently, the ecosystem of Korean startups is now more active than ever. Over the past few years, more than 10 unicorn companies have been born, and the amount of investment that startups raise each year exceeds the maximum. Coupang’s successful listing on the NYSE has also increased global VCs’ interest in Korean startups. Three to four startups have announced their listing on the NASDAQ this year alone. Critics point out that the 52-hour system can dampen the enthusiasm for startups in a situation where the venture boom that blew in the early 2000s is spreading once again and phasing into a second venture boom.

In fact, startups follow a typical Silicon Valley success equation in which a small number of members focus on product development day and night to achieve success. Many say that forcing people to work within 52 hours is a system created without knowing the reality of startups that have to eat, sleep, and fight for survival in the office. In addition, when global competition is intensifying, the compulsory work shutdown will inevitably lead to the deterioration of competitiveness.

Each startup is looking for ways to keep the 52-hour system. Some hire freelancers instead of full-time workers, while others are using the flexible working system to comply with the 52-hours rule and to manage human resources according to job or business characteristics at the same time. Office-oriented startups can use this method, but it is difficult for development or sales jobs who get swamped in work during a specific period. It is fundamentally incompatible with the way startups work, so the industry calls for a supplement to the policy.

It is true that improving the working environment, which requires long hours of work, is the direction our society should aim for in the future. However, it is difficult for startups in the early stages of survival to achieve innovation while maintaining the work-life balance because they are relatively less equipped with work systems and do not know when they will fail.

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