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By Anna J. Park
A rapid tightening of global liquidity is dealing hefty blows to local startup companies, as many of them are forced to accept much-lowered corporate valuations to attract new investments. An overall drop in new investments made by venture capital companies has forced startups to sell their stakes at much lower prices.
For instance, Balaan, a high-end fashion shopping commerce platform, recently received 10 billion won ($7 million) from Shinhan Capital at a corporate value of 300 billion won. That is less than the half of what that the fashion platform company originally aimed to attract in investments at the start of this year. The company hoped to be appraised at 800 billion, yet it had to cut its valuation down to 500 billion won a few months later. Finally, it was able to attract Shinhan Capital's money at a value of 300 billion won in late September.
Balaan's competitor Trenbe also lowered its corporate valuation to 280 billion won in its latest investment round, down 30 percent from its target of 400 billion won.
Many startups' corporate valuations remained the same or were even lowered further than estimates made during their previous investment rounds.
Biotech venture firm Orum Therapeutics is attracting money at a corporate valuation of around 160 billion won. That is the almost the same corporate value acknowledged during a previous investment round last year, when the firm received investments from IMM Investment and DAOL Investment.
Some startups have decided to sell management rights to stay afloat.
Mesh Korea, the operator of Vroong delivery service, officially announced the sale of its management rights early this month. The company was considered as a potential unicorn, hoping to attract new investments at a corporate value of one trillion won. But after failing to attract new investments at the slashed-down price of 800 billion won, the logistics startup decided to find a new owner.
Local streaming service Watcha is also searching for a new owner following a plunge in its corporate valuation. The Korea-headquartered over-the-top (OTT) platform company received investments with its corporate valuation standing at 300 billion won last year, yet the firm's valuation in the M&A market is estimated to be around 150 billion won.
