SEOUL: Yello Mobile, a South Korean startup that has acquired more than 80 app and service providers since it was launched three years ago, raised capital in a funding round that it expects will bring its valuation to about $4 billion.
The Seoul-based company said it has raised $47.2 million from new and existing investors through convertible debt and expects to raise more in the coming weeks to fund its continued expansion into other parts of Asia. If completed, it will become one of the country’s most valuable startups after Coupang, an online retailer that was valued at $5 billion when SoftBank Group Corp. invested $1 billion in June.
In November 2014, Yello Mobile was valued at $1 billion when it raised $100 million from the venture capital firm Formation 8, a backer of the virtual reality firm Oculus VR Inc. later sold to Facebook Inc. for $2 billion. Formation 8 led the latest funding for Yello.
“The growth of Yello Mobile proves the ongoing expansion of the online platform business,” said Hwang Ji Hyun, a researcher at KT Economics and Management Research Institute. “While Yello Mobile is supporting many small- and medium-size business owners regardless of sector, its competitors are specializing more. That general approach is the strength and the weakness of Yello Mobile.”
Yello Mobile, whose structure resembles a mobile app version of the Korean industrial conglomerates known as chaebols, takes equity stakes in promising startups. It works with apps in everything from shopping to advertising, as well as the companies that provide support services such as billing. Its apps include Coocha, a coupon clipper for mobile phones that suggests deals from online retailers, and Pikicast, a video broadcaster of news and entertainment optimized for phones.
The company has to make some financial filings in Korea because its business model of giving startups equity in the parent company has pushed it past the threshold of certain public disclosures.
The company said it had earnings before interest, taxes, depreciation and amortization of 2.8 billion won ($2.4 million) in the third quarter on revenue that rose more than fourfold from a year earlier to about 97.5 billion won, according to company filings. The company has a combined user base of more than 18 million monthly active users in South Korea, it said.