Planning to Secure 10 Bil. Won to Acquire Native Online Brands
NextChapter, a digital commerce platform that acquires and operates Coupang and Naver-based online native brands in Korea, announced on July 23 that it has raised an undisclosed amount in a seed round.
The funding was led by Korean and international venture capital firms including Klim Ventures, Fast Ventures, BlueRun Ventures/BRV Capital Management and Goodwater Capital with participants from Sandbox Network, the largest Korean MCN, and angel investor Kim Sang-hun, the former CEO of Naver Corp. and acting board member of Woowa Brothers.
Based in Korea, NextChapter is one of the first movers in the market to acquire and grow small and medium-sized private label brands that thrive on the e-commerce platforms such as Coupang and Naver’s Smartstore.
Thrasio is the world's largest e-commerce aggregator founded back in 2018. It has acquired more than 100 Amazon FBA (Fulfillment by Amazon) businesses and is reportedly in talks to go public at a US$10 billion valuation. Its rival Perch, founded in 2019, has secured a US$775 million investment from SoftBank’s Vision Fund 2.
NextChapter co-founders/co-CEOs Jay Chung and Joshua Kwon said, “Here in Korea, there are many online native brands selling consumer products with tremendous growth opportunities but fail to scale up due to operational burdens and growing needs of capital. By selling their brands, owners can grow further and earn capital gains as well.”
They also added, “There hasn’t really been an exit strategy for small and medium-sized brands. Most acquisition deals were private equities buying large-scale brands. NextChapter provides businesses with the ability to exit and cash in.”
In addition to the equity investment secured, NextChapter will raise more than 10 billion won in various ways, including acquisition financing and joint investment methods. Based on this plan, the company intends to acquire several online native brands within this year and quickly secure economies of scale by accelerating the pace of acquisitions next year.
According to the company, it is having a detailed discussion with 10-plus online retail brands on potential acquisition deals. Purchase prices for online native brands are typically based on 2x-4x of what NextChapter defines as brand profits. Growth rates, profit margins, customer reviews will be taken into consideration when deciding the ultimate price.
Nam Hong-gyu, CEO of Klim Ventures, said, "NextChapter's founders and executives are not only serial entrepreneurs with ample startup experiences in online advertising, but also a unique team that can successfully manage to acquire and scale brands, leveraging their diverse and professional backgrounds in private equity and consulting." Nam also added that the team will open up the ‘next chapter’ for the brands it acquires.