Startup Seoul newsletter [11/27/2019]

Hello friends,

The LINE-Yahoo Japan merger announced this month was an intriguing one to me — not so much that it teamed together Korean and Japanese internet powerhouses Naver and Softbank in a 50-50 joint venture, called Z Holdings, but for their apparent global aim to take on ecommerce giants like Amazon and Alibaba.

The reasoning is straightforward: Japanese internet companies are lagging far behind Chinese and U.S. counterparts and need to boost their firepower to dominate Asian markets before their rivals do.

Behind the curtain, the founding ventures are on opposite swings: Naver’s net profit jumped 24.7% in the third quarter thanks to AI investments, while Softbank is facing nightmare after nightmare over its failing bets on WeWork and Uber. But for both, the market is now too competitive to go it alone.

Despite Softbank’s capital and Naver’s traction and AI momentum, the rest of the continent, particularly Southeast Asia, is not necessarily theirs for the taking, and India’s multiplayer internet markets are a Wild West of their own. Both companies have had traction in countries like Vietnam and Thailand. But Korean and Japanese companies — hey there, Kakao Corp. — have a history of failing to break through in highly competitive markets like Indonesia, where Alibaba’s Lazada dominates e-commerce, which is Yahoo Japan’s forte.

The story could be very different for Softbank and Naver, which are already quite international. Naver’s LINE is a contentious rival to WhatsApp with traction in SEA. The two companies are championing an AI revolution, and it will be interesting to see how they leverage their massive data troves and technology to tackle a tough, fragmented market.

Other fun news this month:

  • Big money for ONEstore
  • M&As for LINE/Yahoo Japan, Summer International/Dog Loves Coco, Cell Return/Speclipse
  • Kakao is making record bank from paid ads in its chat app
  • Korea Investment Holdings can sell its 29% stake in Kakao Bank, allowing Kakao Corp. to be the internet bank’s largest shareholder
  • Netflix and CJ ENM signed a distribution deal
  • Binance joined Klaytn’s governance council
  • Samsung released a blockchain SDK for developers to create decentralized apps
  • GS Group will provide charging stations for Lime escooters at its properties
  • SK, KDB Industrial Bank, YellowDog and SKS Private Equity have a new $42.5M social venture fund

On newsletter developments, you may have seen that Startup Seoul is sporting a fresh logo and website, where your friends and colleagues can subscribe and check out archives. Thanks to new resources, in cooperation with G3 Partners, we will be testing out more data-driven insights with you in the coming months. Have your friends and colleagues sign up before the year ends to get in on the action.

 You can donate to Startup Seoul in fiat or major cryptocurrencies on our website, and follow us on Facebook.

P.S. Congratulations Nats — and Pinkfong — on an epic World Series win!

Thank you for reading,
-Elaine | 일레인 기자 드림

This month’s news

MONEY

  • ONEstore, a Korean startup that operates a domestic app market, raised 100 billion won from investors including Kiwoom Investment and SK Securities.
  • SK, KDB Industrial Bank, YellowDog and SKS Private Equity launched a joint investment fund worth 50 billion won called Social Value Investment to invest in startups that solve social problems.
  • KB Financial Group and Shinhan Financial Group made hefty investments in budding fintech startups. KB Financial Group invested 26.6 billion won in 23 startups as of October, while Shinhan Financial Group invested 16.9 billion won in 122 firms as of Nov. 14.
  • Mirae Asset-Naver Asia Growth Fund and EastBridge Partners invested $30 million in POPS, a Vietnamese digital entertainment company, to help them bankroll an expansion into original content and Southeast Asia’s growing digital market.
  • Perigee Aerospace, a Samsung backed Korean startup, raised almost $12 million from its investors, including Samsung and LB Investment, to launch a small orbital rocket in 2020.
  • Adapt, a Korean e-commerce retail startup, raised 12 billion won in its series A funding round from investors such as Aju IB Investment, KB Securities and Hyundai Venture Investment.
  • BIGPICTURE, a Korean e-sports corporation, raised 10 billion won in its series B funding round from investors such as Hana Ventures, Smilegate Investment, Mirae Asset Ventures, etc.
  • The Korea Internet Security Agency (KISA) allocated $9 million to promote Korean blockchain startups in 2020.
  • FuriosaAI, a Korean startup that provides AI-based semiconductors, raised 8 billion won from investors including D2 Startup Factory, DSC Investment, Truston Asset, Korea Omega Investment, Quantum Ventures Korea, etc.
  • SECU Letter, a Korean security startup that specializes in malware detection, raised $6 million in its series B funding round from Riyadh Valley Company, KDB Industrial Bank and Korea Investment Partners.
  • Kryptos Biotechnologies, a Korean startup that analyzes single cell genomics, raised 6.1 billion won in its pre-series A funding round from investors such as FuturePlay, Coolidge Corner Investment, and KDB Capital.
  • CUBOX, a Korean startup that provides AI-based face and vision recognition technology, raised 6 billion won in its series A funding round.
  • Classting, a Korean edutech startup, raised 6 billion won from Mistletoe and Yellow Dog.
  • ONDA, a Korean startup that provides accommodation reservation services, raised 5 billion won in its series A funding round from investors such as Bass Investment, KB Investment, Kakao Ventures and ES Investor.
  • Money Brain, a Korean AI tech startup, raised 5 billion won from investors such as KB Investment, CHN Partners, Posco Capital, etc.
  • Lotte Home Shopping invested 4 billion won in Adapt, a Korean media-commerce startup, in a bid to collaborate with startups and respond to the changes in media channels and strengthen their products’ contents. 
  • Copin Communications, a Korean startup that creates emojis, raised 4 billion won in its series A funding round from investors such as KB Investment, Hyundai Investment Partners, DA Value Investment, Shinhan Capital, etc.
  • Localstitch, a Korean startup that operates co-working, co-living spaces, raised 2 billion won in its pre-series A funding round from investors such as IGIS Asset Management, D3 Jubilee Partners, UTC Investment, etc.
  • VLLO, a Korean startup that operates a video editing app, raised 2 billion won from MIrae Asset Venture Investment.
  • SpaceAdd, a Korean startup that operates an out of home advertising network, raised 2 billion won from Altos Ventures.
  • Interbrid, a Korean startup that provides smart media solutions, raised 1.5 billion won in its pre-series A funding round from investors including Hanyang University Holdings.
  • MicroNX, a Korean startup that provides dental equipment, raised 1.5 billion won in its series A funding round from investors including AI Angel Investment and Enlight Ventures.
  • Viva Innovation, the operator of Adoc, a Korean startup that provides a medical platform utilizing medical big data, raised 1.1 billion won in its pre-series A funding round from investors such as AI Angel Club, Smilegate Investment and Wonik Investment Partners.
  • Man In Dream, a Korean startup that provides sharehouses, raised 1 billion won from D3 Jubilee.
  • MEZOO, a Korean startup that provides digital healthcare services, raised 1 billion won from the Wells Investment.
  • Emmaus, a Korean fintech startup and an operator of ALBA Watch and Pay Watch, raised 800 million won in its pre-series A funding round from investors such as BTC Investment, Won & Partners, etc.
  • Creative Value Technology (CVT), a Korean startup that provides face recognition systems, raised 700 million won in its pre-series A funding round from investors such as IBK Industrial Bank, Hyundai Motors ZERO1NE Accelerator, and Plan H Ventures.
  • HBsmith, a Korean startup that provides cloud-based automated QA testing solutions, raised 500 million won in its pre-series A funding round from investors such as Evergreen, Venture Square, and Fin Del Mundo Partners.
  • Pixelic, a Korean software development startup, raised 500 million won in its pre-seed funding round from investors such as Sema Translink Investment.
  • REMAKE DIGITAL, a Korean creative AI startup, raised a 500 million won seed investment from Kakao Ventures and Fast Investment.
  • Pocket Survey, a Korean startup that provides survey services based on mobile messengers, raised 500 million won seed investment from Next Dream Angel Club and four other investors.
  • The Bread Blue, a Korean startup that operates vegan bakeries, raised 400 million won from investors such as Accredited Investors Angel Club, Neoply and Korean Venture Investment.
  • Big Bang Angels invested an undisclosed amount of funding in four Korean startups: Finenano, a nanometa-based ink development startup, Til21, a startup that provides a platform to help fashion brands enter foreign markets, nfusion, a startup that develops 2D mobile collection RPG games, and Glohands, a digital contract startup.
  • FirmaChain, a Korean fintech blockchain startup, secured an undisclosed amount of investment from Blocare, an investment arm of Gameberry, a global marketing and advertising company.
  • Gen G, a Korean esports startup, raised an undisclosed amount of funding from New York City-based Entrepreneurs Roundtable Accelerator to expand its presence in the U.S. esports market.
  • Cafe24, a Korean e-commerce platform, formed a partnership with Hyundai Motor Group’s advertising subsidiary Innocean Worldwide to support online businesses with licensing services. They will roll out licensing services for e-commerce stores to give them easy access to using global brands and characters in the production of their store goods.

 

MOVES

  • Naver’s net profit jumped 24.7% in the third quarter from a year earlier on improved performance of its overall business. Its net profit reached 85.3 billion won in the July-September period, compared to 68.4 billion won a year earlier.
  • Naver‘s Japanese subsidiary Line merged with Yahoo Japan, seeking to become a global internet group that can match China’s e-commerce giant Alibaba or the U.S.-based retail giant Amazon.
  • Kakao‘s profit doubled in the third quarter following the introduction of paid advertisements in its chat app KakaoTalk. Its operating profit soared 93% on-year and sales jumped 31% to a record high 783.2 billion won.
  • The Korean Financial Services Commission approved a plan by Korea Investment Holdings to sell its 29% stake in Kakao Bank to one of its affiliates. The approval cleared a final hurdle for Kakao Corp., the operator of Kakao Talk, to become the biggest shareholder of Kakao Bank.
  • Samsung Electronics and IBM partnered to develop a platform providing business-to-business mobile solutions based on 5G network and artificial intelligence focusing on public safety.
  • Samsung Electronics formed a partnership with Watcha, a Korean video streaming service provider, in a bid to expand its next-generation high dynamic range (HDR) content. The cooperation will make it possible for Watcha Play users to enjoy content with clearer and more realistic images, featuring HDR10+ technology in the first half of next year.
  • LG Electronics Inc. purchased a stake in U.S. laundry tech startup Washlava, which operates smartphone-exclusive laundromats at major universities across the U.S. LG Electronics will combine LG’s apparel management products with Washlava’s laundry platform.
  • LG Uplus and Kakao Mobility released a new navigation service, allowing LG Uplus to significantly improve the quality of its mobile navigation service and Kakao Mobility to expand its user base.
  • LG Uplus partnered with mixed reality display developer Nreal to launch augmented reality (AR) glasses in Korea in early 2020. The partnership will also help LG Uplus to showcase a wider range of 5G-based mixed reality content, including telepresence, AR showrooms and three-dimensional AR educational content.
  • KT and Hyundai Heavy Industries Group stepped up efforts to co-develop advanced smart factory solutions based on the 5G network to improve efficiency and safety.
  • KT partnered with the Industrial Bank of Korea (IBK) and Bellsoft, an automated money exchange kiosk operator, to launch a currency exchange service based on blockchain. The service seeks to provide fast and secure transactions with a monitoring system.
  • SK Telecom launched a new virtual reality (VR) service powered by fifth-generation (5G) network technologies, which will enable users around the world to meet in virtual space and enjoy various activities together.
  • Hyundai Motor established a future mobility venture called Mocean Lab in Los Angeles as part of its initiative to create a sustainable, connected platform. The Mocean Lab will provide mobility services in L.A. and expand its services to autonomous ridesharing, shuttling and personal mobility.
  • Shinhan Financial Group signed a strategic partnership agreement with Plug and Play, a global accelerator, to expand its startup ecosystem globally. The partnership will help startups being fostered by Shinhan Futures Lab advance into developed countries, including the U.S., Japan and Singapore.
  • Shinhan Card strengthened its partnership with Amazon to enhance customer benefits over the next three years. The partnership will make Amazon services available on Shinhan’s online platform PayFan and thus help maximize customer benefits.
  • Coupang stepped up its efforts to bolster its fintech business as a new growth engine by hiring outside financial experts. It appointed representative director Chung Bo-ram as the head of its fintech business and also has repeatedly hired financial experts here and overseas.
  • GS Group formed a partnership with U.S. micro-mobility startup Lime to offer better mobility services using their infrastructure. GS Group will provide charging services for Lime’s electric scooters at its gas stations, parking lots and convenience stores.
  • GS Engineering & Construction (E&C) developed an artificial intelligence (AI)-powered smart home system called Xi AI platform, which enables residents to remotely control internet of things (IoT) devices.
  • Kyobo Life Insurance launched an AI-based underwriting system called Best Analysis and Rapid Outcome (BARO) to provide real-time services to sales consultants and customers.
  • CJ ENM signed a long-term strategic partnership deal with global online video streaming platform Netflix. Under the partnership, CJ ENM will create original series exclusively for Netflix users around the world and also release some of their works on the platform for three years from January.
  • SAP joined hands with Korean data protection company Veritas Technologies to develop data backup and disaster recovery systems for public organizations at SAP’s headquarters in Seoul.

 

EMERGING

  • Pinkfong, a Korean startup that provides educational songs for children, earned millions in revenue thanks to its globally popular song “Baby Shark”. The startup’s revenue jumped about 47% to 40 billion won last year.
  • Lotte brought London mobile shopping tech startup Rezolve into its market. Lotte will incorporate the startup’s IT product, which will allow customers to scan printed deals with their mobile devices.
  • Summer International, a beauty, health, and wellness lifestyle company based in Singapore, acquired Dog Loves Coco, a Korean startup that sells petcare products, to expand its reach.
  • SparkPlus, a Korean shared working space operator, joined hands with electric scooter-sharing service Kickgoing operator Olulo to provide a service that allows visitors to transport more economically and conveniently.
  • M-DAQ, a startup based in Singapore, plans on Korean expansion after its valuation skyrocketed to $368 million following its undisclosed pre-series D funding round.
  • Cell Return, a Korean health care company, acquired Speclipse, a Korean startup that provides laser-based medical diagnostic technology. This acquisition will widen Cell Return’s portfolio by helping them enter into the field of professional medical technology.
  • Emolize, a Korean operator of cross-border mobile payment platform named Payvil, partnered with TNG Fintech Group to provide their Global E-money Alliance (GEA) platform to 10 different countries.

 

CRYPTO/BLOCKCHAIN

  • Klaytn, a leading blockchain project led by Kakao, chose Binance, one of the world’s top cryptocurrency exchanges, as the latest addition to the Klaytn governance council.
  • LG CNS signed a strategic partnership with Kakao‘s blockchain subsidiary Ground X. They aim to break down the boundaries between private and public blockchain platforms, and integrate their strengths to expand the blockchain ecosystem across industries.
  • Samsung SDS will launch a blockchain-powered insurance claims system by the end of 2019 to improve efficiency in the industry.
  • Naver’s fintech subsidiary LVC forged a blockchain partnership with Nomura, Japan’s oldest brokerage, to combine Naver’s mobile app technology and user base with Nomura’s traditional financial knowhow.
  • Sigma Chain, a Korean startup that provides blockchain technology, signed an MOU with U.S. accelerator company USAKO Group on an investment fund of $10 million to cooperate in entering the U.S. blockchain market.
  • Samsung Electronics unveiled a new blockchain software development kit at the Samsung Developer Conference 2019 (SDC 2019). The Samsung Blockchain Platform SDK enables developers of blockchain-based decentralized applications (DApps) to overcome security and complexity issues.
  • Korea Institute of Halal Industry (KIHI) entered into an agreement with Malaysia’s Serunai Commerce to adopt a blockchain-enabled halal platform that traces halal products worldwide. This will provide the Korean halal industry with opportunities to trade halal products with global halal traders through Serunai’s platform.
  • The Olefang Global Consortium developed a blockchain-based ecosystem for tourism in Jeju Island, using a token called Olegang. Through this blockchain ecosystem, foreign tourists will not have to pay conversion costs during their stay.
  • According to a study by Harrity Patent Analytics, the top 3 players in the blockchain industry are Alibaba Group Holding Ltd, Nchain Holdings Limited, and International Business Machines Corp. More than half of all blockchain patent filings worldwide occurred in China, with over 10,000 filings to date.

 

INFRA/R&D

  • The Korean parliament passed a law for peer-to-peer lenders called the Act on Online Investment-Linked Financing. The law is expected to reduce grey areas for P2P lenders.
  • The Incheon Free Economic Zone (IFEZ) Authority partnered with Imperial College London to build a startup/venture town in Songdo International City in Incheon. 
  • The Ministry of Science and ICT plans to invest 450 billion won for blockchain research and development from 2021 to 2026. The initiative aims to create a foundation of data economy powered by blockchain technology.
  • The first Southeast Asia Korea Startup Centre in Singapore will be set up in 2020 by South Korea’s Ministry of SMEs and Startups, with the support of Enterprise Singapore (ESG). The center will provide Korean SMEs and startups with the infrastructure and network to set up in, and plug into, Singapore’s startup and innovation ecosystem.
  • The Ministry of Science and ICT launched the 5G+ Spectrum Plan, a project that aims to have the world’s widest spectrum available for use in 5G. The project plans to add up to 2,640MHz of bandwidth by 2026 to the currently allocated 2,680MHz for use in 5G networks.
  • The Korean government will put forward a new “artificial intelligence national strategy” within this year in a bid to become an AI powerhouse.
  • Chungbuk Technopark (CBTP), a technology innovation hub supported by the Korean government, signed a memorandum of understanding with Nano Dimension, an Israeli 3D printed electronics provider. They will focus long-term research on the crucial design and prototyping phases of innovative electronic projects, using Nano Dimension’s additive manufacturing system, DragonFly. 
  • Korea Institute for Advancement of Technology (KIAT), which provides government R&D support for industrial technology, will expand its R&D support for key materials, components and equipment and projects for building infrastructures next year. Next year’s estimated budget for the project will be $23.1 million, which is more than twice this year’s budget at $9.33 million.

 

 TRENDS/FEATURES

  • Korean startups and VCs based in Silicon Valley are expressing concerns over a contraction in the venture capital investment ecosystem across the Silicon Valley region amid an ongoing trade dispute between the U.S. and China.
  • Seongdong-gu is emerging as a hotbed of social entrepreneurship in Korea. It now houses 250 to 300 related companies, including accelerators Sopoong and Impact Square, investors D3 Jubilee Partners, Yellow Dog and MYSC, and co-working communities for social startups such as Heyground and Cow&Dog.
  • Leading Korean commercial banks are forging partnerships with fintech startups overseas to seek more customers via their easy-to-use mobile platforms. KB Kookmin Bank is providing its cloud services via Pi Pay, a Cambodian mobile payment app startup, while KEB Hana Bank is providing its services via Alibaba affiliate Ant Financial.