[Update 3:15pm] We have changed the headline to reflect the news that the round is incoming as the parties involved are still in the process of due diligence.
[Update 5:00pm] We have also included comments from Seoul-based VC Stonebridge Capital.
This news comes to us via a report by Korean business news site TheBell. The article said that they are in process of due diligence and the US$1 billion buys Softbank a 20 per cent stake in the company, which values Coupang at US$5 billion.
One would think that Softbank is trying to replicate the success it had with Alibaba with this investment into Coupang.
This latest incoming round will give the Seoul-based company an invested war chest of some US$1.4 billion. In 2014, the company raised US$400 million in two funding rounds from the likes of US private fund BlackRock, Sequoia Capital, etc.
According to the same report, Coupang’s value has already surpassed a trillion won or US$913 million.
This new round of funding will come at a pivotal time for Coupang. Last year, according to The Korea Times, the company founded in 2010 by CEO Bom Kim, reported a massive US$110 million operating loss, an amount 28 times higher than its 2013 operating loss. According to the company, this operating loss is in a large part due to a whopping US$136 million spent on building a a massive facility in Incheon, purchasing nearly 1,000 delivery trucks and hiring around 5,000 delivery staff, known as ‘Coupang Man’.
Adding credence to this reasoning, the simple fact that its sales last year went up nearly two fold from US$133 million in 2013 to about US$320 million in 2014.
Coupang has also been in the news recently for its legal battle with fierce rival WeMakePrice. It has demanded US$9.54 million from its rival for targetting Coupang with what the company calls “negative advertising”, according to industry sources speaking to The Korea Herald.
An industry expert weighs in
While Coupang and Softbank plug away at due dilligence, we asked Seoul-based VC Stonebridge Capital‘s Investment Manager Fortune Sohn what he thinks about the news and the probability of the deal going through.
In his words:
“I cannot say for sure if this is true, but if it is, I think Softbank have good reasons to bet big on Coupang for two reasons.
One, the domestic market itself is being disrupted heavily as mobile commerce takes off and Coupang is the leader in the mobile commerce space in Korea. The mobile disruption is setting stage for a new winner in a huge domestic e-commerce market that is still growing from about US$33 billion last year to about US$47 billion in 2018. Mobile commerce is expected to overtake PC commerce in transaction scale later this year.
Coupang has been for over two years — and still is — the leading mobile e-commerce player in the market, and the current PC e-commerce leaders like Gmarket and Auction are about 20 to 30 per cent behind Coupang in terms of monthly user base in mobile.
Two, as Korean culture and entertainment products gain ground in the wider Asian region, demand for Korean brands, products, and lifestyle goods are taking off in China, Japan, and SE Asia. Coupang is in a great position to source stellar Korean products, and Softbank, with ties with Alibaba (in China), Tokopedia (in SE Asia), and Origami (in Japan), has the right influence to leverage their huge user base and efficient local distribution networks in their respective markets.”
Image Credit: Techcrunch