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Coupang Raises $300 Million To Fill Amazon-Sized Void In South Korea

This article is more than 9 years old.

Bom Kim, founder and CEO of Coupang does not hesitate when asked to cite the American-equivalent of his South Korean business.

"We want to be the Amazon of Korea," he said in an interview with FORBES. "We are the largest online retailer here, and we're one of the most well-funded tech companies in Korea."

On Wednesday, the Seoul-based e-commerce leader solidified that position by announcing that it had raised $300 million in an investment led by  BlackRock Private Equity Partners. The announcement comes less than five months after Coupang received $100 million in a round led by Sequoia Capital Global Equities and Sequoia Heritage venture funds, which then valued the company at more than $1 billion.

The latest investment will take that valuation to more than $2.5 billion, according to sources close to the company, bringing Coupang's total backing since its 2010 founding to nearly $500 million. That money is riding on the idea that the South Korean company will beat Amazon.com on its home turf. In a country where Jeff Bezos-led giant has yet to develop a presence among consumers, Coupang has filled the void, evolving from a daily deals site into South Korea's top online retailer in four years.

While Kim declined to comment on his company's valuation, the Harvard Business School dropout pointed to the company's potential and top-line growth as justification for the new capital. Coupang, which sells everything from electronics to beauty products online, is on pace to sell $2.2 billion-worth of goods through its site in 2014, up from the more than $1 billion in gross merchandise volume from the previous year. It's been cash-flow positive since 2012.

Unlike other Korean e-commerce players that have built marketplaces for third-party sellers, Coupang has focused on an Amazon-like model of selling direct to consumers. To that end, Coupang has built web sites, warehouses and a fleet of delivery trucks, allowing it to completely control the online retailing experience from the time a consumer browses for products to the point where goods arrive on their doorstep.

"We've build an end-to-end service that we haven’t found a parallel for anywhere else in the world," says Kim. "And there are certainly aspects of Korea that have allowed us to accelerate our efforts here."

Among those aspects is the widespread usage of smartphone among the Korean population. In a country where almost three-fourths of the people have smartphones, Coupang's mobile platform is responsible for 80% of total traffic and 70% of revenue, with $1 billion-worth of goods bought on phones and tablets last year.

Kim also attributes his company's rapid ascent to its dedication toward creating its own delivery service. Unwilling to rely on a "fragmented" market of third-party delivery companies, Coupang is handling logistics and its own last-mile delivery services through its in-house courier service that provide same-day or next-day shipping. Some of the capital raised will go toward building that shipment program, said Kim, as well as adding to the company's five current inventory warehouses in South Korea.

Coupang's CEO also noted that the money would go toward increasing inventory and expanding technology teams in Silicon Valley, Shanghai and Amazon's backyard, Seattle. And while Kim says he's intent with focusing on the Korea, his investors are already discussing the global possibilities for the company.

"Its differentiated same-day service model, deep mobile expertise, and precedent-setting online commerce offering, makes Coupang an e-commerce leader to watch–not only in Korea but globally,” said Jay Park, managing director at BlackRock Private Equity Partners, in a statement.

In backing Coupang, BlackRock, who was joined by Wellington Management Company, Greenoaks Capital Management and Rose Park Advisors in the round, is adding to the pile of high profile bets on the Asian e-commerce market. Following Alibaba's successful IPO in September, investors have searched for the region's next big winner, highlighted recently by Softbank's $627 million backing of Indian web marketplace Snapdeal and the $249 million plunged into Southeast Asian online retailer Lazada.

"It’s not a secret that the growth globally in the near-term is going to be drawn from the Asian consumer," says Kim.  "The global trends show that commerce is shifting from offline to online and this growth of the Asian consumer. Those two things coming together make this exciting."

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