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Korean e-commerce IPOs in the US

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Coupang rings the bell

This Thursday, Coupang (NYSE: CPNG) became the largest foreign company to make its US trading debut since Alibaba went public in 2014. Shares closed 40% higher than its initial public offering, bringing the company to a market cap of $84 billion, nearly 8x its annual sales.  

Coincidentally, Amazon’s sales ($200 billion from global e-commerce) to valuation ($1.5 trillion market cap) ratio is around the same. It’s conservative relative to Shopify’s. The Canadian e-commerce player has a $175 billion market cap, nearly 60x its mere $3 billion in sales. 

Rewind: So how did Coupang reach $11 billion in revenue? The pandemic had a little something to do with it. The company’s sales in 2020 grew 90% from the previous year. But that’s not to undermine the company’s hustle to get customers what they want. According to the company, over 70% of South Koreans live within seven miles of a Coupang logistics center. From high-quality product curation to optimal user experience to snappy next-day deliveries, CEO Bom Kim wants customers to ask themselves, “How did we ever live without Coupang?” 

Looking forward: Coupang’s got more than delivery guys jetting across the city though. They are entering the over-the-top (OTT) media market with Coupang Play. Whereas optimization in e-commerce is often seen as a race to the bottom as a result of squeezes in the supply chain, Coupang’s diversification strategy will enable them to reap larger margins as Amazon did with Prime and its Web Services. 

So, is Coupang a buy?

The Seoul Startups community meets weekly on Clubhouse to discuss hot topics in the Korean tech scene. Last Friday, Rafi asked: is Coupang a buy?

The scoop: Coupang’s been on the market for just two days. The company’s initial public offering at $35 closed 40% higher at $49.65. The following day, the stock closed down at $48.47. Looking at the after-hours market, Monday’s opening isn’t looking particularly promising.

Zoom out: We hardly have a crystal ball, but a few thoughts for speculators:  

  1. Coupang is in hyper-growth mode - within Korea. Funnily enough, the international listing isn’t a signal for expansion into international markets. In the growth strategies section of their S-1 filing with the SEC, the company outlined plans to gain market share, boost technology infrastructure, and diversify offerings - domestically.   

  1. In spite of the company’s impressive sales boom in 2020, it reported a net loss of $475 million. How Coupang will translate sales into profitability has yet to be determined. Diversifying beyond e-commerce promises higher margins but will Coupang be able to differentiate itself from the likes of Naver, Kakao, or even telecom conglomerates like SKT? 

  1. Coupang’s early investors have agreed to a six-month lock-up period, so it’s hard to gauge what the real price will look like when they can start exercising their exit options. Retail investors should be mindful of the volatility that follows an ultra-hype IPO. Against the backdrop of rapid-fire public listings, Coupang has to make itself known and understood outside of Korea. 

The biggest winner: SoftBank CEO Masayoshi Son. Softbank’s Vision Fund owns 35% of Coupang, which translated to a roughly $33 billion paper gain when the company went public. 

Kurly wants to ring the bell, too 

Sophie Kim, CEO of Market Kurly, said she’s down for New York, too. Coupang’s smaller, premium local competitor is also considering listing in the US this year. 

Backstory: The female-led company has a strong customer base of homemakers and working moms. It keeps its focus on quality with its farm-to-table concept. More than 60% of first-time customers return to Market Kurly, outperforming the industry average of 29%. 

“Every single thing that we are selling on our platform is something that I would personally buy with my own money,” said Kim, who’s known to sample products before they go to market. Kurly differentiates itself by operating through its own brands that are run using a marketplace model to connect retailers with consumers. 

For the record: The listing would follow 5 rounds of financing since 2014. Most recently, the company raised $150 million from Sequoia Capital, Hillhouse Capital, and DST Global last year.

On the radar  

Companies raising over $1 million last week. 

  • Air Premia is raising $58 million in a Series B deal from JC Partners and Korchina TNC for their budget airline service. 

  • MBD Biotech is raising $10.2 million in a Series B deal from GN Tech VC, Shinhan Venture Investment, BSK Investment, DVP Venture Partners, Gilted Partners, Aju IB Investment, and Hana Financial Group for their 3-D Cell cultivation platform. 

  • Allganize is raising $10 million in a Series B deal from Atinum Investment, Stonebridge Ventures, and Sumitomo Mitsui Banking Corporation for their NLP-enabled suite of products. 

  • GI Innovation is raising $9 million in a Series C deal from Yuhan for their immunosuppressant drug development. 

More Seoul Hits

  • LifeSemantics hits the KOSDAQ later this month. The digital health platform has benefited from the loosening of regulations and looks to pave the path to scalability for remote health services. 

  • Whoa, valuations. According to a recent report by the Ministry of SMEs and Startups, the Korean startup ecosystem is valued at $150 billion. 

  • Mo money, mo problems. Korea is now amongst the G7 in terms of GNI per capita, overtaking Italy. It’s rich, but also has some serious rich-world economic problems to deal with.

Yay or nay? Is omurice acceptable for breakfast? How about brunch? Drop us a line on that or anything else on the Korean tech scene in the comments section.