Investors inject cash into Korean start-ups

Investors are increasingly interested in Korean start-ups, with funds nearly doubling between 2014 and 2017, according to data from the Korean Venture Capital Association on Tuesday.

Korean start-ups raised nearly 2.39 trillion won ($2.25 billion) from investors last year, up from 1.69 trillion won in 2014. Last year alone there were 164 investment funds concentrating on start-ups, and they attracted 4.443 trillion won of investment.

Despite more capital across the start-up industry, however, investors are more hesitant about pouring huge sums into a single start-up.

The top 10 start-ups raised a total of 302 billion won last year, according to data from each start-up and reports from Platum, a media outlet that specializes in start-ups. The figure was 80 billion less than 2016’s 384 billion won. In 2015, the top 10 start-ups accrued 1.49 trillion won, and in 2014, 1.18 trillion won. No Korean start-up has reached unicorn status, or valuations of $1 billion or more, since Japanese conglomerate SoftBank invested $1 billion in online retailer Coupang in 2015.

“It’s unfortunate that start-ups in Korea are raising less capital than in China, where individual companies can raise trillions of won in just two years,” lamented Lim Jung-wook, head of Startup Alliance.

First on the list is accommodation platform Yanolja. It succeeded in procuring 80 billion won from two investors last year. Yanolja, which allows users to book accommodation, grew rapidly as it strived to outdo its competitor Yeogi Eottae. SkyLake Investment, headed by former information and communication minister Chin Dae-je, invested 60 billion won, while Aju IB Investment provided the other 20 billion won.

Second on the list is Viva Republica, creator of peer-to-peer payment app Toss. PayPal, Goodwater Capital and Altos Ventures are just some of the colorful names that decorate the list of investors who poured a total of 55 billion won in capital into the company. In February 2015, Toss became the first mobile app to offer an authentication-free money transfer service. By last November, the ground-breaking app attracted 6.5 million accumulated users and recorded over 1 trillion won in monthly transfers.

Woowa Brothers, which operates food delivery service Baedal Minjok, ranked third after receiving 35 billion won from Naver, Korea’s top online portal. On Sunday, the company reported 162.6 billion won in sales and 21.7 billion won in operating profits, a 91.6 percent and 718 percent increase each.

Naver also invested 24 billion won in No. 4 Mesh Korea, maker of delivery service Vroong that manages last-mile delivery for businesses like CJ Logistics and restaurant franchises. The tech giant handpicked delivery giants as the best start-ups to work with to help grow Naver’s artificial intelligence business.

“We invest in companies that help promote our core projects,” explained Naver’s principal manager Kwak Dae-hyun, “This year, we will expand investment in companies that use artificial intelligence.” Naver will equip its AI technology in motorcycles and delivery management systems to facilitate order fulfillment.

Last year, Naver and Woowa made a joint investment of 16.7 billion won in Foodtech, which offers restaurants a convenient way to receive, organize and deliver orders. Foodtech made it to this year’s top 10 list at number nine.

Carpool service provider Poolus rose to fifth after gathering 22 billion won of investments last year. The start-up’s many investors include SK, which also invested in car sharing platform Socar, as well as venture capital firms YellowDog and Collaborative Fund.

ABL Bio, which specializes in the development of new pharmaceutical drugs for immuno-oncology, follows at sixth. Bespin Global, a cloud-based management company, shares seventh place with workplace chat service developer SendBird, a Silicon Valley-based company under Korean CEO Kim Dong-shin. Coming last in the top 10 list is Treasure Hunter, a multi-channel network that supports YouTube and other creators to monetize content and grow viewership.

BY PARK SU-RYON [kim.eunjin1@joongang.co.kr]