In his spare time, Gary Kim used to trade some second-hand items for sale on an Internet billboard for fellow employees in an instant messaging app in South Korea, Kakao Corp.
Gary Kim and his co-worker then note that they can turn it into a money-making business. In 2015, we were able to launch a platform, now called Karrot, to sell second-hand goods over the Internet, with the money they made after selling through Cocoa and with the help of a former engineer at Naver Corp.
The platform was primarily aimed at residents of Banguiu’s Technology Valley outside of the capital city of Seoul, known as South Korea’s Silicon Valley, and has maintained its local approach even after it has expanded across the country and abroad. On the Carrot platform, users can trade face to face in most cases, within a range of usually 6 kilometers, in what is known as the neighborhood market.
Plans to raise financing will raise the company’s value to $ 1 billion
Kim says that Danggeun Market, the startup behind Carrot, plans to raise about 100 billion won ($ 90 million) this summer, raising its value to around $ 1 billion. So far, he said, the Corona pandemic has greatly supported the platform.
“We hope to become a unicorn company,” Kim, 42, said in an interview in Seoul, meaning a company with a market value of over $ 1 billion.
If successful, Carrot will join a growing list of estimated South Korean tech startups worth over $ 1 billion serving the country’s tech-savvy market.
According to CB Insights, which provides analysis on private companies, 11 Korean companies are on the list of “unicorn” companies.
In addition to buying and selling second-hand goods ranging from headphones to luxury yachts, Carrot users can share societal information about everything from job vacancies to lost and found housing lists, and local businesses that do marketing through the app.
Carrot is the largest market for used products in South Korea
Kim, who used to be Cocoa’s co-CEO, and with him also, Paul Kim, a former Cocoa employee and co-founder of Carrot, says of his online platform, “It’s an online place where the community can come together.” He added: “If the neighbors are together in a certain place, everyone will want to join.”
According to data analysis company MobileIndex, Carrot is now the largest second-hand product market in South Korea and the second largest in the country’s e-commerce sector after Coupang Corp.
Joyce Yee, a 52-year-old English teacher, said she traded more than 20 items through the app, including a coffee maker, books and an air conditioner.
“When I moved to Seoul from Los Angeles, I didn’t know anything about my new location and how to use the parcel delivery system. After that, I heard from my friend that she bought a Louis Vuitton bag for $ 200 via Carrot,” she said.
She added, “Carrot has become my first choice for shopping. It includes cheaper and more varied options, and I do not need to go and check the items.”
What about profits?
According to Kim, although the Seoul-based startup is making losses, it is generating tens of millions of dollars in annual revenue, mainly through advertising.
He said that the number of monthly active users on the platform has more than doubled, reaching 12 million users in October 2020 compared to January of the same year, while sales have quadrupled in October 2020 compared to the previous year.
So far, Kim said, the (Covid-19) pandemic has helped his project, as additional active users are selling through the app while spending more time at home. The virus has affected South Korea less than the United States and European countries.
“It’s an added value,” Kim said at the company’s headquarters in the Gangnam district of the capital. “Fortunately, our users do not believe that face-to-face trading is dangerous, since everyone wears masks,” he added.
According to Jay Choi, an employee of Softbank Ventures Asia who has invested in Carrot, although the Coronavirus supports sales, it also poses a threat. If more stringent social distancing measures are imposed with the increase in cases of Coronavirus.
“The Corona pandemic poses risks and presents opportunities at the same time,” Choi said. He added, “There was a fear that face-to-face trading would not continue if a complete lockdown was imposed on the city.”
Kim says that Carrot aims to be as popular as Kakao Talk, the largest messaging app in the country. According to Mobile Index, the Cocoa Talk app has about 36 million active monthly users.
Kim says the company does not have any immediate plans to go public, but it will eventually. Currently, he said, it can stand up using money from long-term investors who believe in its vision.
Carrot raised a total of 48.1 billion won from investors, including SoftBank Ventures Asia, Altos Ventures, Kakao Ventures and Goodwater Capital. Capital).