Fashion Industry Targets 'Yanolja' but Faces Liquidity Crisis
Continued Operating Losses, Urgent Need for Additional Investment
Women’s shopping platform Brandi is facing financial difficulties. Although it has grown its presence alongside Abley and Zigzag, it is now encountering a liquidity crisis.
According to the investment banking (IB) industry on the 1st, Brandi’s runway (the period it can sustain operations without additional funding) is six months. It is reported that this assessment was made internally recently. If the break-even point (BEP) has not been reached, the runway period tends to be accurate.
An IB industry insider said, “Brandi is in a state where survival is only possible by attracting additional investment,” adding, “Investment sentiment remains frozen, making it difficult to overcome the crisis.” He continued, “At present, receiving additional funds from existing shareholders seems to be the best option,” and added, “Whether investment funds can be secured within the remaining six months is uncertain.”
As the runway period shortens, the company has no choice but to reduce costs. Most of a startup’s expenses are labor costs. For this reason, the industry is closely watching the possibility that Brandi may undertake restructuring. Reducing personnel inevitably risks falling behind competitors, so attention is focused on what decision will be made.
In this regard, a Brandi representative said, “We are currently securing the necessary funds for at least 12 months,” adding, “Recently, cost reductions and increased advertising revenue introduced to the services Brandi and Hybeo have continuously extended the runway.” He further stated, “We are strengthening the business through activation of advertising models introduced in each service and overseas collaborations, so we expect profitability to improve further in the future.”
Brandi’s major investors include Korea Development Bank, Atinum Investment, Big Basin Capital, Mirae Asset Venture Investment, Breeze Investment, K2 Investment Partners, Korea Investment & Securities, DS Asset Management, and Naver. Brandi has secured various financial investors (FIs), mainly venture capital (VC).
In particular, Naver holds a significant stake in Brandi. In September 2020, Naver made a solo investment of 10 billion KRW in Brandi. The following August, it added another 20 billion KRW. This brought the cumulative investment to 30 billion KRW, strengthening business cooperation. Through Naver’s investment, Brandi entered the Japanese market.
As online fashion platforms grew, Kakao acquired Zigzag, and Shinsegae acquired W Concept. Naver began full-scale collaboration through Brandi. After receiving Naver’s investment, Brandi was recognized with a valuation of 1 trillion KRW, showing an upward trajectory. It was regarded as a visible candidate for ‘unicorn’ status, but growth did not last long.
Brandi’s sales last year recorded 117.2 billion KRW, a 7.1% decrease compared to the previous year. During the same period, it posted an operating loss of 32.1 billion KRW and a net loss of 69.1 billion KRW, falling into a deficit trap. Although the company is large in scale, profitability is declining. Due to the nature of the platform business, there are limitations to achieving break-even in a short period.
Founded in December 2014, Brandi operates the women’s fashion platform ‘Brandi’, the men’s fashion platform ‘Hybeo’, and the fashion fulfillment service ‘Helpi’. Its subsidiary Avid E&F, established in 2019, operates the business-to-business (B2B) platform ‘Trendy’, which connects wholesalers and retailers based on Dongdaemun fulfillment infrastructure.
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