Cloud management provider Cloocus receives $41 mn in Series B funding

Cloud management service provider Cloocus Co. has received 50 billion won ($40.8 million) from SK Inc. C&C, those familiar with the investment told The Korea Economic Daily.

The fresh injection of funds comes as part of the Series B funding worth 100 billion won.

A managed service provider (MSP) offers a computing framework platform to organizations to remotely manage a customer's IT infrastructure. The services may also extend to managing end-user systems.

Founded in 2019, Cloocus is one of the main MSPs in South Korea. Last year's sales more than doubled on-year to 34.1 billion won.

Private equity fund Stonebridge Capital Inc. is the largest shareholder of Cloocus. SK C&C invested 10 billion won in the year Cloocus was founded and previously had an 18.84% stake in the company.

Last month, industry leader Megazone Cloud Corp., the first South Korean business partner of Amazon Web Service (AWS,) also enjoyed hefty investments.

MBK Partners and IMM Private Equity each invested 200 billion won in Megazone Cloud on Feb. 13.

A couple of days later, KT Corp., South Korea's No. 2 telecom operator, decided to invest 130 billion won in the country's largest cloud services provider.

Megazone's Series C funding round of 530 billion won was the largest-ever fundraising for a Korean cloud computing firm – making it a unicorn or a company with a valuation of over $1 billion. 

Another industry heavyweight Bespin Global Inc. wraps up its 100 billion won funding this month. 

The string of investments is a welcome turnaround for Korean MSPs that suffered from long-term deficits. The MSPs have to pay high fees to companies that provide the infrastructure – such as Amazon Web Service, Microsoft Azure, and Google Cloud.

In Korea, the companies also had difficulty convincing potential clients about the security and convenience of the services. 

RECORD PERFORMANCES

The COVID-19 pandemic and the ensuing teleworking and online studies have increased companies’ dependence on computing framework platforms. Noticing such trends, the platform providers chose economy of scale as their survival tactic. 

Megazone Group, the parent company of Megazone Cloud, and Bespin Global increased the number of employees from 600 and 300, respectively, in 2018 to 1800 and 900 this year. Last year, both companies posted record sales. 

Megazone Group utilizes its joint venture program with LG CNS, a subsidiary of LG Corp., for dominating the sales network. 

Between the three MSPs within Megazone Group and the LG subsidiary, the combined sales are forecast to exceed 900 billion won – a record for the domestic industry.

Bespin Global and Cloocus will exceed sales of 200 billion won and 100 billion won respectively; also for the first time for both companies. 

Investors expect the demand for third party IT infrastructure management and end-user systems to continue on the back of the widespread adoption of software as a service (SaaS.)

In addition to the traditional areas that used cloud services such as enterprise resource planning (ERP) and human resources (HR), security and collaboration tools have also begun incorporating cloud services. 

The global SaaS market last year tripled in size from three years prior to $145.5 billion, according to German market data analytics firm Statista. 

More companies are also using Multicloud, in which MSPs play an integral role.

Seeing the growing market potential, South Korean conglomerates are revving up their engines. Samsung SDS Co., LG CNS, SK C&C have all announced plans to expand their existing MSP units.

Telecommunication company KT Corp. is also poised to strengthen its subsidiary KT DS. 

An industry insider said the conglomerates will ramp up their sales campaigns to dominate the industry.

Write to See-eun Lee at see@hankyung.com
Jee Abbey Lee edited this article.