Naver's metaverse platform seeks over $40 mn in funding

Naver Z Corp., the operator of South Korea's metaverse platform Zepeto, is in the early stages of talks with investors to raise more than 50 billion won ($42 million) in fresh funding, according to the company and investment banking sources on Oct. 13.

The prospective funding is likely to value the startup at around 1 trillion to 2 trillion won ($840 million to $1.7 billion), analysts said. The valuation is about 10 times as much as the 150 billion won at which the company secured a combined 17 billion won from three Korean entertainment giants -- HYBE Co., YG Entertainment Co. and JYP Entertainment Inc -- at the end of 2020.

"We are in the process of raising new investment, but still in the early stages," a Naver Z official told Market Insight, the capital news outlet of The Korea Economic Daily.

Zepeto, which boasts over 200 million accumulated users since its launch in August 2018, plans to ramp up global marketing with new funds. Making its foray into the American market, it set up its US unit, Naver Z USA, in September of this year. 

The 3D avatar service app has become a popular playground for teens and twentysomethings, with teenagers making up 80% of its users. K-pop girl groups Blackpink and TWICE create their content on the app to communicate with fans around the world. Non-Koreans make up about 90% of its users.

Zepeto has been expanding its footprint into the fashion industry by partnering with luxury brands Gucci and DIOR to showcase their newest products. It also teamed up with content providers such as Disney and South Korea-based edtech startup SmartStudy, the creator of YouTube's current most-viewed video, Pinkfong Baby Shark Dance.

Naver's wholly-owned SNOW, a smartphone camera application operator, holds a 88.99% stake in Naver Z.

"It is symbolic that global luxury brands like Gucci and DIOR picked Zepeto, ahead of Roblox as a partner," said Hyundai Motor Securities analyst Kim Hyun-yong.

Roblox, the world's metaverse platform, is valued at $41.3 billion.

"Roblox's major users are pre-teen boys, but Zepeto's main users are girls in their mid to high teens who are more consumption- and communication-oriented," he added.

Write to Jong-woo Kim and Jun-ho Cha at jongwoo@hankyung.com
Yeonhee Kim edited this article.