Concerns Over Teamfresh, Invested by KT, Running Away? ... Aftermath of the Ballan Incident

TeamFresh Temporarily Halts Dawn Delivery Service
Liquidity Crisis Spreads Across the Distribution Industry

The dawn delivery logistics company 'TeamFresh' has temporarily suspended its delivery service due to a liquidity crisis. The company expanded its business by handling fresh food dawn delivery in the rapidly growing e-commerce market during the COVID-19 pandemic. However, amid a domestic economic downturn and intensified delivery competition, profitability has deteriorated, worsening its financial difficulties. Investors, including KT, the largest shareholder of the company, have bet approximately 200 billion KRW on its growth potential. However, similar to the luxury platform Ballan, concerns are growing that TeamFresh, which has been sustained through large-scale investments, will be unable to resume operations if external funding is delayed.

According to the distribution industry on the 8th, TeamFresh suspended its dawn delivery service from the 31st of last month. Initially, the investment funds scheduled to be deposited on the 1st of this month were not received, and with the expected refusal of operation by delivery drivers, the company halted dawn delivery for three weeks. TeamFresh plans to resume the service from the 21st.

Previously, TeamFresh also faced difficulties with its dawn delivery service in January and February due to failure to pay transportation fees. Delivery drivers went on strike at the end of February over unpaid wages. Payments for January and February transportation fees are currently delayed, while March fees have been prepaid. The company plans to fully pay the delivery drivers once the investment funds are deposited on the 10th.

However, it is uncertain whether the investment funds will arrive on time as planned by the company. In the case of Ballan, right after securing an investment of approximately 15 billion KRW from Silicon Valley in February, it suddenly filed for corporate rehabilitation, which significantly undermined trust in e-commerce companies in the capital market. Industry insiders analyze that the delay in investment fund deposits for TeamFresh is not unrelated to this. A TeamFresh official stated, "As the capital market worsened, when urgent funds were needed, we lowered the company valuation to attract investment, but the coordination process with existing investors who entered at a high valuation was not smooth," adding, "Currently, the company valuation is lower than before."

Founded in May 2018, TeamFresh pioneered the B2B (business-to-business) dawn delivery agency market and grew rapidly. Starting with sales of 2.7 billion KRW in its first year, 2018, the company’s revenue surged to 544.4 billion KRW last year, growing more than 200 times in seven years.

Seeing this high growth, external investments followed one after another. TeamFresh has raised over 200 billion KRW in cumulative investments. Beginning with Series A funding in 2019, it completed Series D funding worth 160 billion KRW in 2022. Currently, KT holds the largest stake at 17.79%, and the founder, CEO Seongil Lee, is the second-largest shareholder. Additionally, institutional funds from private equity firm Stick Investment, venture capital DSC Investment, and Woori Venture Partners have also been invested.

However, profitability has worsened steadily. Operating losses increased from 54.1 billion KRW in 2023 to 78.1 billion KRW last year. This is due to intensified competition as major dawn delivery customers like Coupang and Kurly secured their own logistics networks.

TeamFresh currently serves about 6,000 clients, including Hyundai Green Food, Paris Baguette, NS Home Shopping, and Oasis, holding a 90% market share. TeamFresh states that it can resume delivery services once the investment funds are deposited.

However, since e-commerce market transactions are based on trust, concerns about financial difficulties continue to raise doubts about the sustainability of the business. A food industry official who is a client of TeamFresh said, "Currently, dawn delivery orders on the website are deactivated, and sales are being made through regular delivery," adding, "We are exploring alternative methods to replace the service."