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Startups

Korea’s top online flea market set to raise $180 mn in funding

By Feb 01, 2021 (Gmt+09:00)

Danggeun Market Co-founders Kim Jae-hyun (left) and Kim Yong-hyun
Danggeun Market Co-founders Kim Jae-hyun (left) and Kim Yong-hyun

Danggeun Market Inc., South Korea’s largest online flea market operator, is poised to raise up to 200 billion won ($180 million) in fresh funding from private equity and venture capital funds, including global VC firms.

Many of its existing investors have expressed their intent to participate in the new round of funding, which is likely to more than treble the startup’s value to around 1 trillion won in one and a half years, according to investment banking sources on Feb. 1.

Their investment will likely make Danggeun the country’s 13th unicorn, or a private company with a valuation above 1 trillion won, as a major beneficiary of the stay-at-home trend amid the global pandemic.

Back in September 2019, the online marketplace for secondhand goods received 40 billion won in investment from Silicon Valley-based VC funds, including Altos Ventures and Goodwater Capital. For the funding, Danggeun Market was valued at 300 billion won.

Danggeun means carrot in Korean, and is also short for “in your neighborhood.” The company was established in 2015 by Kim Yong-hyun and Kim Jae-hyun, former co-workers at Kakao Corp., South Korea’s largest mobile messaging app.

The online marketplace connects buyers and sellers in the same neighborhood. In the beginning, it limited direct transactions to those living within 6 km of each other to reduce fraud risk.

To enhance its website’s credibility, the company provides verification services based on a user’s location and reviews. It also runs review systems to allow users to rate their counterparts and offer recommendations, using machine learning algorithms.

Since it launched as a nationwide online marketplace in 2018, the number of its monthly active users has grown to reach 12.3 million as of the end of last year, three times more than the year previous. That is equivalent to about one-fourth the South Korean population.

Danggeun is now the country's No. 2 e-commerce company, after Softbank-backed Coupang Corp., and has contributed to expanding the size of the country’s online secondhand market to 20 trillion won. 

“Thanks to a surge in user numbers, Danggeun has solidified its place as a platform company,” a PEF source told Market Insight. “But as it has not yet made a profit, it is important for the company to show a profitable business model.”

Write to Chae-Yeon Kim at why29@hankyung.com

Yeonhee Kim edited this article.

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