South Korean unicorns, or startups valued at more than $1 billion, are slowing their growth pace to shore up profits while reviving long-delayed initial public offering plans.
Domestic unicorn companies’ performance in 2023 was generally better than the previous year, with many of them recording record profits.
However, the company’s strong performance is largely due to the fact that it has significantly reduced advertising and marketing expenses to survive the lack of funding in the venture capital industry.
Woowa Brothers Corporation, which operates South Korea’s largest food delivery app Baedal Minjok, recorded sales of 3.4 trillion won ($2.5 billion) last year, an increase of 16% from the previous year.
Operating profit increased 65% year-on-year to 699.8 billion won due to strong growth in flat-rate paid delivery services. Advertising costs have also been reduced by 34% compared to 2022.
Karly, a pioneer in the delivery of fresh foods in South Korea, will reduce its operating loss by 40% year-on-year to 143.6 billion won in 2023, and its sales will increase by 2% to 2.8 trillion won, a record high. did.
Advertising expenses decreased by 41% to 31.5 billion won. In the 2023 financial results, the operating loss decreased for the first time since the company was founded in 2015.
Bucket Place, which operates the home interior and decoration platform O!House, recorded record sales of 240.2 billion won in 2023, an increase of 31% compared to 2022.
Operating loss decreased by 66% to 17.5 billion won.
The operating loss of neighborhood marketplace app Dangun Market Inc. sharply decreased from 56.5 billion won in 2022 to 1.1 billion won. Sales for the same period surged 156% to 127.8 billion won.
In 2023, Dangun recorded a profit of 17.3 billion won on a standalone basis for the first time in its eight-year history. Despite significantly reducing advertising expenses, advertising revenue in 2023 more than doubled from 49.5 billion won in the previous year to 126.7 billion won.
Still, many Korean unicorns remain in the red, mainly due to marketing costs to expand their user base.
Musinsa, the country’s largest fashion platform, posted a loss of 8.6 billion won in 2023, compared to a profit of 11.3 billion won in 2022, despite a 40% jump in sales.
The company blamed the shortfall on stock subsidies worth 41.3 billion won granted to employees.
Proptech company Jigbang saw its operating loss widen to 40.8 billion won last year from 37.1 billion won the previous year, despite a 47% increase in sales to 129.7 billion won.
The company attributed the increase in the shortfall to one-time depreciation charges related to its 2022 acquisition of Samsung SDS’ home Internet of Things business.
Travel platform Yanolja’s operating loss in 2023 was $1.7 billion, down 88% from 2022, due to losses from the travel services division Interpark Triple Corporation, which it acquired in 2022. By comparison, Yanolja’s revenue increased 27% year over year. 766.7 billion won in 2023.
fintech startup
South Korean fintech unicorns are also suffering losses. Sales of Viva Republica, which operates the country’s financial super app Toss, increased by 21% from the previous year to 1.37 trillion won.
However, the operating loss remained almost unchanged at 206.5 billion won, as the large fees paid for remittance services to other financial institutions accounted for 60% of expenses in 2023.
Viva Republica’s ambitious overseas expansion has stalled. Last year, the company closed its Southeast Asia business headquarters, Toss South East Asia, based in Singapore, just one year after its establishment.
cyber security exchange
The slowdown in the cybersecurity market in 2023 has hit Korean unicorns in this sector.
Dunam, which operates South Korea’s top cryptocurrency exchange Upbit, has predicted that its sales in 2023 will decrease by 19% from the previous year to 1.0 trillion won, and its operating profit will decrease by 21% to 640.9 billion won.
Domestic peer Bithumb fell into the red last year, with sales dropping 58% to 135.8 billion won and an operating loss of 14.9 billion won.
games unicorn
Results for gaming unicorns were mixed.
Shift Up Corp.’s revenue in 2023 reached 168.6 billion won, an increase of 155% from the previous year, as the new third-person shooting action role-playing game title “Goddess of Victory: Nikke” gained popularity. reported.
Operating profit increased by 508% to 111.1 billion won.
Npixel’s operating loss in 2023 widened to 43.2 billion won from the previous year’s loss of 1.1 billion won. Sales decreased by 53% to 31.6 billion won.
The developer of the massively multiplayer online role-paying game (MMORPG) game Gran Saga has been hit by delays in the release of new games and weak interest in existing games.
Industry insiders at the startup said it needed to expand overseas to maintain growth, but that proved more difficult than expected.
Woowa Brothers, Viva Republica and South Korean startup Jobis & Villains, which operates artificial intelligence-powered accounting platform 3.3, have shut down loss-making overseas operations including Vietnam and Singapore, raising concerns about their growth momentum.
Write destination Kim Joo Wan kjwan@hankyung.com
Kim Yeon-hee edited this article
