For decades, the South Korean economy was under the control of chaebol, large conglomerate companies typically run by one family. Recently, scrappy startups have risen in the South Korean market to challenge these traditional businesses. From fin tech firms to video on demand services, these ten burgeoning startups are taking South Korea by storm. The Scope Weekly takes a look at Viva Republica, Coupang, Socar, Yello Mobile, Soomgo, Lunit, Woowa Brothers, Hyperconnect, 4:33 Creative Lab and finally Watcha.
In 2011, Seunggun Lee was working as a dentist in Seoul when he realized that what he wanted to do was create apps. After a few false starts, he launched Toss in 2014. What began as a simple mobile wallet quickly morphed into South Korea’s most popular fin tech app that offers loans and insurance from the convenience of a mobile device. In 2018, the app topped $1 billion in monthly transactions; it has attracted substantial investment from heavy hitters like Sequoia Capital and PayPal.
SG Lee, co-founder, and CEO of Viva Republica said “We are proud and honored to become partners with GIC and Sequoia China – some of the world’s most prominent investors. This bridge round is a strategic investment which will enable us to explore major opportunities such as investments and acquisitions to become the go-to service for all consumer financial needs while providing a superb user experience.”
Harvard alumnus Bom Kim saw an opportunity in the South Korean market in 2010. Amazon had not yet spread its reach into the country’s online retail business, so Kim created Coupang, an online and mobile e-commerce store that sells everything from clothing to household supplies. Coupang quickly vaulted ahead of competitors to become South Korea’s most prominent e-commerce firm. With the help of a $400 million investment from Sequoia and Softbank, the firm hit unicorn status in 2014. Today, an estimated 50% of South Koreans use the Coupang app, and the company is reportedly preparing for an IPO.
Launched in 2012 in Busan, Socar brought the car-sharing model to South Korea. With Socar, users can rent vehicles for 10 minutes or more at a time. After an initial Series A round of $18 million, the company’s growth exploded. They now have over 3 million users in South Korea and recently expanded operations into Malaysia. In April 2018, Socar received a $53.7 million investment from Bain Capital and SK Group to help fund their rapid expansion.
Lee Sang-hyuk recognized early on that South Korea had many promising mobile startups, but they were all concentrating on different sectors of the mobile market. After debuting Yello in 2012, Lee began acquiring these smaller firms, incorporating them into the Yello brand, but also allowing them to remain relatively autonomous. His strategy paid off in 2014 when the company received a $1 billion evaluation. Today, Yello is worth an estimated $4 billion and has received over $185 million in investments from firms like Japan’s SBI Investment and London-based Macquarie Capital. “Yello will be a true leader in the era of digital transformation by increasing its presence in new businesses via blockchain technology,” said Sanghyuk Lee, CEO of Yello. “We will accelerate growth momentum and solidify the foundation for growth by reinforcing our competitiveness in new business areas.”
After earning business degrees in the US, Hwan Kim and Robin Kim returned to South Korea to work in the tech sector. In 2014, they joined with fellow entrepreneur Jiho Kang to launch Soomgo, a mobile app that matches users with professionals offering services like tutoring and wedding planning. The team honed their app at Y Combinator and quickly became South Korea’s top online services company. Today, Soomgo has over 50 million users and recently completed a $3.4 million Series A funding round. In recent weeks, the company has been burdened with news reports that many freelancers are ghosting academic papers for students.
Lunit was founded in 2013 by a team of six South Korean engineers. The company’s Insight program uses AI to scan millions of CT and x-ray images, helping medical practitioners more quickly diagnose patients. The company’s primary focus is facilitating diagnoses of tuberculosis and cancer. According to Lunit, their software has a 95% accuracy rate. The company’s clients include several large hospitals, including Samsung Medical Center in Seoul. SoftBank has sunk around $5 million into Lunit, most recently leading a $3.3 million Series A round for the startup. “It is Lunit’s vision to make leading software for the diagnosis and interpretation of medical data through deep learning technology,” says CEO Anthony Paek. “Through Lunit Insight, we intend to open a new era of medical imaging and treatment that will empower medical practitioners to make more efficient and accurate decisions for patients.”
Bong Jin Kim founded Woowa Brothers in 2011 and soon built the company’s Baedal Minjok app into the most popular food delivery service in South Korea. By the end of its first year on the market, the app had gotten downloaded 20 million times. Goldman Sachs came calling to the tune of $36 million, and South Korean search engine company Naven recently led a $31.1 million funding round for Woowa Brothers. The company plans to roll out food delivery robots sometime soon. I want to have robots deliver not only food but also food ingredients, products sold at convenience stores, medicine, and even newspapers. Bong Jin Kim said during an interview, “On their way back from delivering, robots could pick up recyclable waste from customer’s houses and throw it away. If consumers no longer have to buy a large number of products at once at a supermarket thanks to delivery robots, the capacity of refrigerators would also be reduced.”
Founded in 2014 by a trio of South Korean entrepreneurs, Hyperconnect has made bank with Azar, its wildly successful video chat app. The app surged in popularity throughout Asia, amassing 1 billion matches in less than a year. By the beginning of 2018, Azar had topped 20 billion games and included users from more than 190 countries. As the startup’s annual revenue approaches $100 million, industry experts are predicting that Hyperconnect will soon go public.
4:33 Creative Lab
It was 2009, and mobile games were exploding worldwide. Columbia graduate Joonmo Kwon saw an opening in the South Korean gaming sector and decided to launch his gaming startup, 4:33. In 2011, the company found success with it RGP Epic Hearts series. The company received a $100 million influx of cash from Tencent Holdings and Line Corporation in 2014, and 4:33 recently announced they would soon release a location-based augmented reality game based on the Ghostbusters franchise.
Dubbed Korean Netflix, Watcha founded in 2011, was designed to be the South Korean answer to Netflix. Unlike Netflix, Watcha also boasts a separate service that helps recommend films to users. After initial investment from Kakao Ventures, Watcha attracted funds from prominent Korean firms like Neoplux and SGI Venture Capital. In March 2018, the company received a $12 million influx of cash, which they plan to use in a new push to acquire English-speaking customers. Total funding up to date is $19.6M. CEO Park Tae-hoon said, “All of the online services will be personalized in the near future,” Park said. “Most of the existing ones offer the same content or products for customers. But only those who can offer individual-targeting services will be able to survive in the upcoming data-driven era.”
As South Korea surges ahead on the global market, the country’s nascent startup culture is helping to push the envelope on innovation. Traditional behemoths have dominated the country for years, but startups are thriving due to increased access to skilled labor and high internet penetration. From their base on the Korean peninsula, these South Korean startups are poised to sweep over the rest of Asia and the world.
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