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Startups after pandemic: Winners and losers

Sept. 26, 2022 - 15:23 By Byun Hye-jin

Over the last few years, pandemic-triggered market volatility has provided great business opportunities for South Korean startups. But in the face of a deteriorating market outlook driven by Russia's invasion of Ukraine and inflation, only a handful of startups with strong business portfolios could keep their title as “the next unicorn” with a corporate value of some $1 billion or more.

RSquare, a commercial real estate platform, said its sales had surged on-year by 61 percent to 100 billion won ($70 million) in the first half of this year.

The company said its efforts to diversify its business portfolio through new channels such as data analytics and a real estate investment advisory have been the core drivers of growth.

Sales from winning contracts to offer leases on several industrial complexes, factories and warehouses are expected to reach more than last year's 100 billion won.

In 2021, RSquare recorded about 120 billion won in sales, the highest figure among local property tech companies and twice as much as that of Zigbang, a residential real estate platform.

Yanolja, a travel and leisure booking app operator, is riding the crest of the endemic stage as well, bringing in 100.5 billion won in sales and 3.1 billion won in operating income in the first quarter this year. In particular, the company is making forays into global markets, offering comprehensive cloud-based hospitality solutions for hotels in over 170 countries.

Mushinsa, the nation’s largest online fashion platform by sales, also logged 466.7 billion won in sales last year, a 40.7 percent increase from the previous year. Its net profit increased 18.9 percent to 54.2 billion won in the cited period. It recently announced it will expand its business to selling fishing apparel and gear, motorcycles and other two-wheeled vehicles, as well as hotel bookings.

On the other hand, several startups have been directly hit by rising recession fears. Mesh Korea, the operator of tech-based logistics startup Vroong, had to cut its corporate value in half from 1 trillion won to 500 billion won to attract investment. It recorded an operating loss of 35.5 billion won last year.

Streaming platform Watcha faced a bigger-than-expected operating loss of 24.8 billion won last year. As part of the company’s belt-tightening measures, it put new projects such as webtoon and music streaming on hold.

Onul-siktak, which runs seafood e-commerce platform Onul-hoi, is also suffering from financial trouble. On Aug. 31 the company advised staff to resign and shut down the delivery service. Sources said it suffered from a recent failure in Series C funding of 20 billion won.

“Tough market situations seem to shed light on startups with a competitive edge,” said an official from a venture capital firm who wished to remain anonymous. “Only the companies that can innovate within the business circles can turn a crisis into an opportunity.”