It has been announced in Korean media this morning that the country's leading food delivery service (Baedal minjeok) has secured funding of USD36 million from Goldman Sachs.
JaeHyun Lee, in charge of the Korean investmnet said: "Korea is a very exciting market for e-commerce and we are excited to be partnering with Baedal Minjeok, to help them solidify their position in Korea and expand into new markets."
Kim BongJin, CEO of Baedal Minjeok also commented: "Through this investment we will strengthen our leadership position with our Baedal Minjeok Service in Korea, as well as boost efforts for our expansion into Asia. Our ultimate ambition is to change the system of food delivery in Asia, and with our new partners Goldman Sachs and our existing partners we will make this happen."
Woowa Brothers, the comapny behind the Baedal minjeok application, was established in 2010, and has been in a fierce advertising battle with No. 2 contender Yogiyo for most of this year. Millions has already been spent on competing TV commercials and other marketing activities. The fresh funding injection will be used to build the companies existing marketing activities, as well as to continue the planned expansion into markets beyond Korea, initially Japan and South East Asia.
It is no wonder that there is fierce competition for the food delivery market in Korea. The total market is currently worth around USD$13 billion and even top placed Baedal Minjeok only commands around 10% of the available market, meaning that there is still huge scope for building the business domestically. In addition, restaurant penetration in Korea is perhaps the highest in the world, with ten times the number of restaurants per capita that the USA. Fierce competition between restaurants easily translates to competition between the services adding food delivery in a densely populated nation, like Korea.
Food delivery is also a big issue globally, with GrubHub raising $200 million in an IPO earlier this year. Delivery Hero, of which Yogiyo is the Korean subsidiary, is also finding wide success bringing food delivery to over 20 countries around the world.
Baedal Minjeok was founded in 2010 and has been widely praised for simplifying food delivery in Korea, by making a wide range of restaurants easily available on one mobile application.
It is also worthy of note that Goldman Sachs were the financiers responsible for both the Facebook and Alibaba IPOs. It seems a reasonable assumption that the most recent funding raised by Baedal Minjeok is the first step towards their own IPO.
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