The World Covets 'K-Unicorn'

Global Market Focuses on Business Models of Coupang and Woowa Brothers

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#.On December 28 last year, Germany's Delivery Hero (DH) abruptly agreed to accept the conditions set by Korea's Fair Trade Commission for the sale of DH Korea in order to acquire Woowa Brothers. DH, which gave up its business built over 10 years in Korea since 2011, mobilized funds amounting to 4.8 trillion won to acquire Woowa Brothers.

#.On February 10 this year, domestic startup Hyperconnect made a surprise announcement that Match Group, a U.S. Nasdaq-listed company, agreed to acquire 100% of its shares for $1.725 billion (about 1.933 trillion won). The video messenger service 'Azar' provided by Hyperconnect has a global user ratio of 99%, making it unfamiliar in Korea but already recognized with a value of 2 trillion won in the global market.

#.Two days later, on February 12, Korea's largest e-commerce company Coupang submitted a filing for listing on the New York Stock Exchange (NYSE). On that day, the U.S. Wall Street Journal (WSJ) reported Coupang's listing plan, stating, "It is expected to be the largest foreign company IPO since Alibaba Group's blockbuster debut in 2014." It also reported that a valuation exceeding $50 billion (about 55.4 trillion won) is anticipated.

Korea's unicorn companies (unlisted ventures valued at over 1 trillion won) are attracting global attention. In the past two months, Woowa Brothers, Hyperconnect, and Coupang have officially announced exits worth trillions of won in the global market. The so-called 'K-Unicorn' business models are being recognized worldwide.

◆Innovative Businesses of Noteworthy K-Unicorns=About a year ago, in November 2019, Bloomberg News pointed out that Korea was failing in innovation, unable to produce notable unicorn companies due to regulatory constraints. The few unicorn companies that started domestically were evaluated as being in their infancy. However, the status of Korean unicorns has completely changed now. Although the regulatory environment has not changed much, it is evaluated that remarkable achievements have been made through innovation in technology and business.

Coupang closed its existing social commerce business and introduced 'Rocket Delivery,' directly purchasing products to guarantee quality and emphasizing fast delivery to increase customer satisfaction. Although annual deficits increased due to the need for large-scale logistics center construction, investment in technology and automation facilities, and additional hiring, Coupang did not stop investing and built its own business model. The results of this model have become prominent through the COVID-19 pandemic. Last year's sales nearly doubled, and losses significantly decreased. Professor Jeong Yeonseung of Dankook University's Department of Business Administration explained, "Coupang's system, which achieved digital innovation through direct purchasing and direct delivery, is the most ideal platform in the digital age because it can simultaneously help sellers, customers, and local communities."

Hyperconnect's growth method is completely different from Coupang's. Based on world-class technology in video communication and artificial intelligence (AI), it targeted overseas markets from its founding in 2014. 'Azar' has recorded over 540 million downloads in 230 countries, establishing itself as a representative global video messenger. Han Kim, CEO of Altos Ventures, which invested in Hyperconnect, said, "Hyperconnect grew in the opposite way (to Coupang). It did not receive much investment and has grown rapidly while making a profit every year."

Woowa Brothers was also evaluated for accumulating the richest experience and technological capabilities in the rapidly growing global food delivery market.

◆Continued Global Expansion of Domestic Unicorns=In the startup industry, it is expected that domestic unicorns recognized for their value in the global market will continue to emerge following Woowa Brothers, Hyperconnect, and Coupang.

According to the Ministry of SMEs and Startups, there are 20 companies in Korea that have surpassed a corporate value of 1 trillion won. Among them, more than 10 companies are analyzed to be able to pursue exits through IPOs and mergers and acquisitions (M&A) in the future. The immediate candidates preparing for listing include Krafton, Viva Republica, Yanolja, TMON, and Socar.

A startup industry official said, "Many startups that have grown beyond a certain scale have received foreign capital investment, and for unicorn companies to successfully exit, M&A with overseas companies can also be considered as a powerful method." Han Kim, CEO of Altos Ventures, said, "Soon, companies with values as large as Kakao or Naver, or perhaps even greater, will emerge," adding, "Large Korean companies will grow their businesses to the trillion-won scale in the U.S."