Startup Seoul newsletter [12/18/2019]

Hello friends,

The end-of-year flurry of activity is upon us and plenty of South Korean tech stars have taken headlines: Food delivery app-maker Woowa Bros. is being acquired for $4 billion, biotech company Aprogen Inc. became the country’s 11th unicorn (depending on who’s counting), and global executives are filing into tech companies that were fledglings five years ago.

For me, the most inspiring of these stories is Viva Republica, maker of the Toss payments app, as it has concluded months of hurdles to lead the launch of the country’s third online-only bank. Toss Bank will contend against Kakao Bank and K Bank to help ease the pain that is Korean online banking.

At the beginning of my Korean startup coverage circa 2015, I spotted Toss’ logo on the wall of D.Camp, where Seung-gun Lee incubated his fintech startup after quitting a career as a dentist to take on a broken financial system. Since then, Viva has been plowing through milestone after milestone, raising $48 million from PayPal in March 2017, passing $1 billion in monthly transactions nine months later, and securing billion-dollar unicorn status last year.

On my visit to Seoul in July, I visited Toss’ Gangnam office, where a unicorn floatie greets guests and the 100+ employees and reminds them of the company’s ever-growing dreams. Starting as a one-job app to let people bypass the archaic obstacle course of online peer-to-peer payments with just a few clicks, Toss now helps everyday people invest in their futures. The company is already valued at $2.2 billion, labeled Korea’s most disruptive fintech startup (OK I did that), and consistently ranked among the country’s top finance apps.

As we enter a new decade, Korea’s tech scene looks ever promising. I have a feeling Toss is just getting started.

Other big news this month:

  • Big money for WeMakePrice
  • M&As for Delivery Hero/Woowa Bros., Nivea Beiersdorf/LYCL, Yanadu/Kakao Kids
  • Coupang hires Alberto Fornaro as CFO
  • Viva Republica gets the OK to launch online-only Toss Bank
  • Aprogen Pharmaceuticals becomes Korea’s 11th unicorn
  • Blockchain company Terra hires Uber exec Rahul Abrol to lead new SEA office

Recently, I’ve been working with Forkast.News, a Hong Kong-based media startup that covers blockchain and other emerging technologies’ intersection with politics, business and economy. We took the wraps off our research arm to launch our first industry report on China’s ambitions to launch a digital currency and use of the technology in telecom, philanthropy, the used-car market and more. The 44-page report, which I edited, is a must-read if you’re invested in the industry. Download it here.
 
Plus, I wrote a quick overview for LongHash on the state of South Korea’s blockchain industry. Check it out below.
 
May your year-end havoc wrap up smoothly and holidays be festive and fulfilling. See you in 2020!

Thank you for reading,
-Elaine | 일레인 기자 드림

My News

South Korean Crypto Trading Is Stagnant, But Blockchain Investors Spot Opportunities

Blockchain project investors in Korea see an upside to the quieter environment. They say they’ve expanded their scope overseas, but still see pockets of potential for local development, especially in gaming and decentralized finance. Read >

 

This month’s news

MONEY

  • Samsung Electronics will make an additional $8 billion investment in its memory plant in Xian, China, in a preemptive response to the projected growth of memory chip demand.
  • A group of financial institutions led by the Korea Development Bank (KDB), a state-run lender, will provide around $5 billion in loans to support LG Chem’s bid for investment in an overseas rechargeable battery plant.
  • German food delivery giant Delivery Hero will acquire a majority stake in South Korean food delivery unicorn startup Woowa Brothers at a $4 billion valuation.
  • LG Chem and General Motors will jointly invest up to $2.3 billion to establish an electric vehicle battery plant in Ohio.
  • The combined value of early-stage technology investor FuturePlay’s portfolio startups exceeded the 1 trillion won ($858.2 million) milestone.
  • Naver Financial attracted investment worth about 800 billion won ($683 million) from Mirae Asset Financial Group. The deal could further fuel competition in Korea’s growing fintech sector.
  • Cash-strapped e-commerce start-up WeMakePrice raised 120 billion won ($100 million) from IMM Investment and plans to use the funds to hire more employees, secure partner firms and improve e-commerce software.
  • Coworking space operator Sparkplus raised 30 billion won ($25.2 million) in a series B funding round.
  • Streami, a blockchain startup, raised 8 billion won in its series A funding round from investors including Yu-kyung PSG and Strong Ventures.
  • Samsung Group reportedly invested 8 billion won ($6.83 million) in Korean semiconductor startup IVworks.
  • Dabeeo, a Korean startup who develops map tech and platform, raised 6.5 billion won from investors such as The Seed Investment and HB Investment.
  • NEUROPHET, a Korean medical software company, raised 6 billion won in its series A funding round from investors such as Magellan Technology investment, ES investors, etc.
  • Deepeye, a Korean startup providing an AI-based eyewear shopping service application, raised 5 billion won in its series A funding from investors such as Smilegate Investment and KDB Capital.
  • Sellerhub, an e-commerce startup, raised 4.4 billion won in its series A-1 funding round from investors including Lotte Accelerator and Shinhan Capital.
  • Howbuild, a Korean IoT startup, raised 2.3 billion won in its series B funding round from Hanwha Investment & Securities and Korea Investment & Securities Co.
  • Aprogen Pharmaceuticals Inc, a bio venture founded with proprietary technologies in antibody engineering and recombinant protein engineering, raised 2 billion won to become the country’s 11th unicorn.
  • Art & Design International, maker of men’s beauty product Swagger, raised 2 billion won in a series A round from existing investors.
  • Edutech startup Supaja attracted a 2 billion won series A Investment by KTB Network and The Wealth Investment.
  • Money brain, a Korean AI startup raised 2 billion won investment from China’s IDG Capital.
  • Medipixel, an AI-based medtech startup, raised 1 billion won in its series A funding round from QUAD Investment.
  • Quotabook, a SaaS-based finance management platform, raised 1 billion won seed funding from investors such as Fast Investment and MashUp Angels.
  • Glorang, a Korean startup who provides blockchain-based University Application system, raised investment of an undisclosed amount in its pre-series A funding round from CNTTech.
  • Second Syndrome, which provides shared storage service app Dalock, raised investment from Kakao Ventures and SBI Investment.
  • Acemedical, an AI-based medtech startup, raised an undisclosed amount in its series A funding round from Springcamp venture capital.

 

MOVES

  • Naver Financial joined a cross-border mobile payment alliance with Japan-based Line Pay, Taiwan’s iPass and Naver’s NHN Payco. The collaboration enables the four companies’ nearly 80 million users to make electronic payments at stores.
  • Korean Air and Kakao will cooperate on digitizing the airline and providing in-flight entertainment, including offering more convenient services on mobile.
  • Kakao started testing its van-hailing service Venti, where users can reserve 11-passenger vans via Kakao T, the company’s ride-hailing app.
  • Kakao Kids merged with Yanadu, a company specializing in English education, to go beyond  the kids’ market and grow into a “comprehensive education company.”
  • Samsung Electronics was the third-largest vendor of wearable devices in the third quarter of the year amid soaring global demand for wearables.
  • Samsung Electronics partnered with Baidu to produce its new cloud-to-edge artificial intelligence chip, Kunlun, with mass production slated for early next year.
  • Samsung executives received prison sentences for sabotaging labor union activities at the top conglomerate’s customer service unit.
  • LG Electronics supplied solar modules for a rooftop solar panel project at Moorebank Logistics Park, Australia’s largest logistics center.
  • SK Telecom launched a 5G autonomous platform for vessels in collaboration with Samsung Heavy Industries, expanding the concept of autonomous operation to ships.
  • SK Group will expand its investment in startups and build more plants in China. SK China recently agreed to create a 1 trillion won ($847 million) investment fund with Hillhouse Capital, an Asia-focused private equity firm headquartered there.
  • SK Telecom and Statistics Korea have started the pilot service of a foot traffic map that measures foot traffic across the country by using big data collected from SKT’s mobile network stations.
  • The LG U+ merger with CJ Hello received final approval for a deal that will transform the competitive landscape in the telecom and broadcasting businesses. KT’s clear dominance of the paid TV market will be brought to an end, while LG U+ will become the undisputed leader in the local budget-phone market.
  • KT Corp. and China Mobile Communication Corp. agreed to boost cooperation on 5G roaming services and a blockchain system.
  • KT opened Korea’s first AI-based big data platform to be shared and used by individuals and businesses on demographics, real estate, consumption trends and more.
  • KT Corp. joined hands with the country’s emergency management agency and a Seoul hospital to develop 5G-based emergency medical services.
  • KT’s AI hotel robot ‘N bot’ made its official debut in a Seoul hotel. Guests can request items through voice command or touch screen of KT’s GiGa Genie device in a room, and the N bot will identify the location to deliver the items.
  • KT Corp. signed a strategic partnership with 360-degree camera maker insta360 to offer better 5G-based video communication service.
  • Genie Music, the music streaming subsidiary of telecommunications giant KT Corp., launched a new entertainment service that combines 5G-powered virtual reality technology with K-pop.
  • KB Investment and Indonesia’s TelkomGroup launched joint investment fund Centauri, to invest in growth-stage startups.
  • Hyundai Motor will introduce its Ioniq electric vehicles in Indonesia through ride-hailing service Grab to gain an early foothold in the newly burgeoning EV market.
  • Hyundai Heavy Industries Group will spin off its robotics business and establish a new subsidiary, Hyundai Robotics, aiming to increase sales from the promising business to 1 trillion won ($853 million) by the end of 2024.
  • Hyundai Heavy Industries Group is seeking to strengthen its cooperation with Saudi Arabia’s Aramco to solidify its position as a major business partner for Saudi Arabia’s Vision 2030 Project.
  • Viva Republica, the PayPal-backed creator of financial services platform Toss, has secured preliminary approval for a license to operate its digital bank, Toss Bank, in Korea.
  • Coupang, South Korea’s largest online retailer, hired Alberto Fornaro as its new CFO. He served the same role at International Gaming Technology (IGT PLC) and has been in global corporate financial management in Europe, South Korea and the U.S. for 25 years.
  • Cafe24, an online shopping platform provider, added open marketplace TMON and fashion beauty shopping application ABLY to its Multimarket Management service, enabling e-commerce merchants to connect to more diverse online markets.
  • Nivea’s Beiersdorf became the second largest shareholder in Korean beauty startup LYCL to provide growth support for the fledgling cosmetics brand.

 

EMERGING

  • The combined value of Seoul-based early-stage technology investor FuturePlay’s portfolio startups exceeded the 1 trillion won ($858.2 million) milestone.
  • South Korean defense company Hanwha Systems Co. forged a strategic partnership with Plug and Play Tech Center, a global early-stage investor and startup accelerator.
  • Global startup accelerator Techstars will accept applications for its first South Korea-focused accelerator program through March 1, 2020, to select 10 startups mainly dedicated to three categories — enterprise technology, human-device interaction and lifestyle tech.
  • Travelous launched an open beta version of its website to connect Korean travelers through the app at overseas tourist spots, starting in Bangkok, Thailand, and Danang, Vietnam.
  • The Tada ride-hailing service is facing allegations that its service does not abide by the local transportation law. It is set to face a hearing in the Seoul Central District Court.
  • In partnership with Ulsan Port Authority (UPA), SK Innovation and the UN Environment Program, local social venture Usisan has recycled nearly 80,000 plastic water bottles thrown away by sailors and fisherman in Ulsan so far, turning them into consumer goods like eco bags and tumblers. 
  • Cafe24, an online shopping platform provider, signed a partnership with Kakao to enhance e-commerce marketing. Cafe24 will integrate its e-commerce platform with Kakao Talk’s easy registration, an enterprise service for new member registration and marketing activities.
  • RoboRisen, a Korean robot startup, developed a smartphone-connected modular robot named PingPong to serve as a playmate and a teacher for kids.
  • Sweet Spot, a Seoul-based property tech startup that introduced the concept of a retail short-term space rental marketplace in South Korea, is looking to expand by running its own outlets in Seoul.

 

CRYPTO/BLOCKCHAIN

  • Kakao will support the popularization of blockchain-based services through Klip, a cryptocurrency wallet that will be released in the first half of next year. Kakao is planning to make Klay, a cryptocurrency to be stored in Klip, available for use in various ways in everyday life.
  • Sparkplus signed a partnership deal with blockchain startup Kasa Korea to launch a blockchain-based funding platform that would make it possible for people without much money to indirectly and collectively fund real estate.
  • Xensor, a Korean blockchain-based IoT platform company, signed an MOU with China’s LT Capital to establish an ecosystem and build an infrastructure for a competitive advantage in the cryptocurrency market. 
  • Bloom Technology‘s Locus Chain technology is now reportedly able to reduce blockchain transaction processing times to fractions of a second.
  • Hyundai’s blockchain subsidiary Hdac created a new blockchain investment company, named T Investment, and a $27 million fund to invest in promising blockchain business startups.
  • Blockchain payment network Terra has set up its Southeast Asia hub in Singapore, with Rahul Abrol, Uber‘s former Asia-Pacific head of strategy, to head international business and strategy.
  • Korea’s Terra stablecoin is now powering Mongolia’s memePay app.
  • Blockchain firm Coinplug introduced decentralized identity(DID) solutions that enable users to have full control over their identity data without relying on a central repository system.
  • Blockchain-based karaoke dApp SOMESING announced its listing on the DCoin Exchange.

 

INFRA/R&D

  • The Korea Advanced Institute of Science and Technology (KAIST) will open the Korea Policy Center for the Fourth Industrial Revolution (KPC4IR) to study new technologies and contribute to expanding innovative ecosystems.
  • The government will establish a help desk in Singapore early next year to support local fintech startups’ expansion into Southeast Asia.
  • Korea unveiled the world’s first geostationary environmental monitoring satellite that can closely check the movement of fine dust and other air pollutants in the East Asian region in real time.
  • The South Korean government released a new strategy for deregulation in the artificial intelligence (AI) industry that includes an investment of about 1 trillion won for advanced semiconductor development to create an economic effect of up to 455 trillion won in the industry by 2030.

 

 TRENDS/FEATURES

  • Stores focused on health and beauty are changing the landscape of the cosmetics industry, and K-beauty brands are the biggest beneficiaries. Last month, Estee Lauder bought Korean beauty company Have & Be for 1.3 trillion won and last April, French personal care company L’Oreal completed the acquisition of one of Korea’s leading fashion and makeup brands Nanda.
  • Korean investors have been turning their attention toward the real estate market, reflected in an increase in mortgage lending, while cash flows in the equity market have been overall stagnant.
  • Korea’s new venture ecosystem achieves remarkable results in 2019 with a 25.5% increase in investment in the first three quarters, standing at a record high of 2.8 trillion won. 
  • VC investment into the South Korean startup ecosystem has doubled in the last five years, according to Startup Alliance managing director Jung Wook Lim. 
  • New venture investment in Korea in the first three quarters of 2019 hit a record high of 2.8 trillion won (US$2.3 billion) – a 25.5% increase from the same period last year, according to numbers released by the Ministry of SMEs and Startups and the Korean Venture Capital Association
  • South Korea is now home to 11 unicorns after online fashion platform Musinsa and biotech company Aprogen joined the list of non-listed startups with valuation of over $1 billion.
  • South Korea’s burgeoning pet industry has emerged as another promising market for startups with expertise in artificial intelligence and robotics, such as Varram System that developed Pet Fitness Robot and Fitpet that provides a urine test kit for pets.