GNTech Venture Capital

Fast growing platform startups used to be the most favored investees for Korean VCs. But recently, Investors look very carefully when investing in a platform startup. What really happened within 6 months? During the era of financial crisis with down-turn of stock market and funding market, profitability and survival became the most important factor when making an investment decision while most platform startups are used to huge net loss.

Most platform startups survive based on funding and ever rising valuation. In order to achieve a successful funding with high valuation, platform startups must show high growth indexes, such as GMV (Gross Market Value), MAU (Monthly Active User), etc., to investors. However, showing high growth indexes every month and year is a very challenging task. Oftentimes, massive marketing expenses are inevitable to accelerate performance indexes despite the fact that it will worsen profitability. Marketing cost of platform startups often keep increasing as funding round progresses with value increase; thinking that at some point the platform can be highly profitable which may never achieve or take very longtime. Hence, investors had took a great roll not only supporting platform startups to grow to unicorns, but also giving excuse for hyper-valuation with huge profit loss during the past years.

Marketing for platform startups is a must to grow; especially, at the beginning in order to start a flywheel, a network effect through balancing of demand and supply side of a platform. First approach is usually performance marketing, and then with enough funding startups usually do mass marketing, such as TV commercials. Some do performance marketing on a daily basis, and that may sometime cost more than massive TV commercials and their revenue.

" Oftentimes, Massive Marketing Expenses are Inevitable to accelerate Performance Indexes Despite the Fact That it will worsen Profitability "

“Balancing grow and profit is a very challenging task for platform startups. Startups are suggested to prove profitability in a near future with effective marketing strategy to attract investors”

SUGGESTIONS:  Startups must understand target customers and pinpoint when to execute performance marketing. Understanding organic growth numbers by turning off marketing exercise is needed. Startups should minimize CAC (Customer Acquisition Cost) and calculate profit margin counting in LTV (Lifetime Value) with CAC and service cost. The platform should not have service flaw and should upgrade constantly since retention may be more important than acquiring new customers.

GNTech Venture Capital Co., Ltd. (“GNTech”) is one of most reputable venture capital in the Korea owned by KOSDAQ list company KookSoonDang Brewing Co., Ltd. GNTech is currently managing multiple funds funded by the National Pension Fund, the Korea Growth Fund, and others with AUM size of more than $300 million USD. Since establishment GNTech has invested around 200 companies including Kakao, Cafe24, Market Kurly, Wadiz, Musinsa, Alteogen, Aptabio, Oncocross, Good T Cell, Inventagelab, etc. GNTech is specialized in secondary investments and biotech / IT Platform Service investments.