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[StartupRecipe] Corporate Value Declining, M&A Deals Growing

#Weekly Funding Overview

[Oct. 3 ~ Oct.7]

The total funds raised by Korean startups of this week is KRW 78.6 billion.

GapjonePlant shopping mall-PathfinderH
ZiovisionVideo analysis1 billionHonest Ventures
Mynormal CompanyFoodtech1.7 billionPre-Series Alotte Ventures
Hotel CullinanHotel-M&AONDA Management
MetabeatKPOP Content-GBIC, GSR
Korea Credit DataBusiness Management35 billionLG U+
DaimresearchSmartfactory solution10 billionSeries AStonebridge Ventures, Atinum Investment
WorkingcowFintech-SeedSeoul Techno Holdings
BottleGolf400 millionPacemaker, CNT Tech
ArtramiArt work commerce-Pre-Series ANew Paradigm Investment
NuvilabFood scanning-Series ASmilegate Investment, We Ventures, Capstone Partners, GS, Daily Partners, UTC Investment, Seoul Investment Partners, Shinhan Asset Management
AutolRadar11 billionSeries AHyundai Group zeroone, Hyundai Wia, Hana Micron, Automus A2G, Schmidt-DSC Future Mobility Fund, L&S Venture Capital, K& Investment Partners, Seoul Investment Partners, Posco Venture Capital
Readi Robust MachineEnergy Recovery System2 billionPre-Series AStrong Ventures, The Ventures, Y&G Angel Investment Association
Govise technologiesFashion consulting-M&ACLOVirtualFashion
IndidlabProphtech-SeedMashup Angels
altaTraffic solution-Pre-Series AHansol Holdings, Blue Point Partners
HaechilabsBlockchain12 billionSeries ASpring Camp, Bass Investment, WeMade, Npartners

Major Funding

  • Korea Credit Data, which offers business management services to small companies, raised KRW 25 billion and has become a unicorn with a KRW 1.1 trillion corporate value. It runs POS, B2B food supply, and community focused on Cash Note, its business management service utilized by 1.7 million enterprises.
  • Haechi Labs, a blockchain wallet company, has secured a KRW 12 billion investment with a corporate value of KRW 200 billion. It provides security audit, wallet, consignment, and brokerage services and promotes B2C wallet business for general users this year.
  • LiDAR sensor startup AutoL has received a KRW 11 billion investment. As a spin-off company from Hyundai Motor’s in-house startup, it develops object recognition software and 32-channel LiDAR for medium and long distances. It will use this funding to pursue international markets.
  • Daim Research, which provides smart factory automation solutions, has secured an investment of KRW 10 billion. It develops comprehensive operational solutions, including cluster robot control and plant layout. With the funds, the company plans to establish the R&D Center in Boston and promote joint research with MIT in preparation for its international growth.

#Trend Analysis

Due to the prolonged economic downturn, companies that have failed to draw follow-up investments are being sold or raising money at a lower corporate value.

Luxury fashion platforms, which were very popular with investors last year, had their corporate values cut in half. They depleted their investment by engaging in excessive marketing rivalry and spending tens of billions of won. They are having trouble attracting subsequent investment as the investment market deteriorates, which is causing them to reduce their operations. Balaan is having trouble getting Series C funding. Mesh Korea, a logistics startup that was considered a potential unicorn, is selling its management rights after going through liquidity problems. 

Watcha, the first OTT service in Korea, is also searching for a new owner as its corporate value has fallen by one-third. Hyundai Motor Company purchased 42dot, an autonomous driving startup that was expected to become the next unicorn and in which investments had been made initially with the intention of an acquisition. However, during the acquisition process, the corporate value of 42dot is known to have fallen compared to the previous funding round. In September, the first-generation e-commerce TMON was sold to the global e-commerce company Qoo10. Its corporate value, which was once valued at KRW 2 trillion, is estimated to have fallen to around KRW 200 billion.

Though it’s getting harder to attract investment, M&As are on the rise. For startups with enough cash, it is an opportunity to expand their business without spending much money as the price of the acquisition target decreases. Some startups are thus actively involved in M&A and purchasing multiple startups.

Drama & Company, which operates the business card management app Remember, has acquired three recruiting-related startups this year alone. It is expanding its business into the human resource management sector by acquiring startups specializing in recruitment, such as and Superookie. My Real Trip, which is actively pursuing a takeover, has also strategically invested in workation startup offices and IWATRIP, the owner of the children’s travel platform Donkey. It recently bought the K-content company Startrip with the intention of luring tourists from abroad.

The company JOBIS & Villains, which runs the tax calculation app 3o3, also acquired two companies in the first half of this year: HowMuch, which developed a salary management app for part-time employees, and Smoothy, which offers video call technology. 

In addition, a unicorn startup Toss joined the mobile communication industry by acquiring MVNO phone provider Merchant Korea. A fintech company Finda is getting ready to launch a customized loan business aimed at small business owners by acquiring a commercial analysis startup Openub at the end of last month.

VCs expect more M&As in the second half of the year. This is owing to the fact that M&As are inevitable for businesses that are struggling to get funds during the ongoing recession and that investors occasionally advise M&As to help them recoup their investments.

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