[Evolution of Care①] Rapid Growth of Startups like Hanguk Senior Research Institute, Caring, and CareDoc
[Asia Economy Reporter Kim Cheol-hyun] The senior care market is changing. The driving force behind this change is startups. Leveraging their technological capabilities, they are leading the digitalization of a market that has traditionally been offline-centered. With the rapid acceleration of aging in South Korea, the outlook is bright. Startups engaged in related businesses have attracted investments exceeding 100 billion KRW.
On the 1st, the startup investment information platform The VC announced that a total of 12 investments were made last year in startups in the 'Healthcare-Nursing sector.' The disclosed investment amount was 48.35 billion KRW. In the previous year, a total of 10 investments were made, with a disclosed investment amount of 55.6 billion KRW. The VC classifies companies operating services such as home care services, caregiver matching platforms, and welfare equipment as part of the 'Healthcare-Nursing sector.' Over two years, 22 investments totaling 104 billion KRW have been made in startups in this sector.
Representative startups in this market include Careing, which secured an investment of 30 billion KRW in the second half of last year; Korea Senior Research Institute, which received 11 billion KRW in 2021; and Caredoc, which completed a Series A investment of 10.6 billion KRW in 2021 and is currently raising Series B funding. In Caredoc's Series B, existing investors as well as new investors are participating, and funding is ongoing.
◆Evolution of Care=The reason startups are entering the home care market, including home care, daycare centers, and welfare equipment, is that they believe technology can solve existing market problems. Although 15 years have passed since the introduction of the Long-Term Care Insurance system for the elderly in 2008, more than 90% of the approximately 20,000 home care providers and daycare centers nationwide are operated by individual business owners. These small-scale facilities operate on a micro level; although demand is high overall, the market is fragmented and not digitalized. Care institutions face difficulties in recruiting beneficiaries and managing operations. Park Jae-byeong, CEO of Caredoc, said, "Although the aging problem is serious, the domestic care system is very poor, and as time passes, the care gap becomes more pronounced." He explained, "There are many challenges to address, such as supply shortages relative to demand and improving the service environment."
Startups’ solutions focus on digitalization. For example, Caredoc allows matching with care workers or caregivers simply by entering basic information such as schedule, location, and medical history. Korea Senior Research Institute provides a Software as a Service (SaaS)-based administrative automation solution that simplifies complex paperwork. Simply put, by using the internet to input where one lives, what illness one has, and when care is needed, a caregiver is dispatched. They also operate a professional job notification service used by more than 16,000 care workers. Such digital technologies help solve various problems in the senior care market. Lee Jin-yeol, CEO of Korea Senior Research Institute, said, "We have digitalized non-face-to-face tasks in the home care industry and analogized consumer touchpoints with human touch, establishing a digilog model suitable for the senior market."
◆Reasons for Large Investments=Investors are interested in senior care startups because of the market size and growth rate. Jo Soo-min, an analyst at SoftBank Ventures, said, "South Korea's aging speed is the fastest among OECD countries, more than 1.5 times faster than Japan," adding, "The home care market is worth 6 trillion KRW annually and is growing at an average annual rate of 19%." This is why SoftBank Ventures participated in the 11 billion KRW Series A investment in Korea Senior Research Institute.
Another advantage is that once systems are established, profits are stable. Although home care centers are operated by private businesses, the government supports 85% of the costs through budgets (care benefits). Basic livelihood security recipients receive up to 100%. The senior care market in Japan, which experienced aging earlier than Korea, exceeds 100 trillion KRW. In Japan, based on the 'Kaigo Hoken'?a system similar to Korea's Long-Term Care Insurance?elderly care services have been activated. As of 2021, the market size exceeds 100 trillion KRW. Unicorns generating trillion-won sales have emerged. Nichii Gakkan, which provides direct care services, operates about 8,000 facilities and recorded annual sales of 3 trillion KRW; in 2020, Bain Capital acquired it for 1.4 trillion KRW.
Analyst Jo explained the growth potential of the domestic market by noting that although the average life expectancy of Koreans is 83 years, the 'healthy life expectancy'?the period of living physically and mentally healthy?is 73 years. During the 10 years of functional decline, spending patterns change. Costs are incurred for facility care, home care, welfare equipment, and caregiving. He said, "Korea can also see the emergence of unicorns in the silver industry like Japan," adding, "Companies that improve efficiency and convenience through digitalization while enhancing service quality will be the winners."
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