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After an M&A rollercoaster that involved getting acquired by LivingSocial<\/a> and then Groupon<\/a>\u00a0(before getting spun out again<\/a>), Korea\u2019s Ticket Monster, a mobile e-commerce marketplace, today is announcing a major cash injection to boost its chances as an independent company in a highly competitive, tech-savvy market.<\/p>\n The company has raised $115 million from a new outfit, the Simone Investment Managers, along with\u00a0existing shareholders including unnamed global sovereign wealth funds \u2014 funding that its founder and CEO Daniel Shin tells me will be used to build out its newer grocery business as well as to expand its travel operations. But the money comes at a price: Ticket Monster (commonly abbreviated to TMON) has raised the money in a down-round: the company\u2019s last fundraise of $40 million<\/a> almost exactly a year ago valued the company at $1.5 billion.<\/p>\n It\u2019s a story that points to how inflated and frothy the market has been of late, and maybe how arbitrary valuations actually are: that $1.5 billon was double the valuation<\/a> of the company when it spun out from Groupon the year before.<\/p>\n Shin tells me that the reason for the big fundraise is primarily to support the company\u2019s newest vertical: it has moved into grocery sales and plans to double down on this space in coming months, as it sees a niche where Coupang \u2014 commonly referred to as the Amazon of South Korea and last valued at $5 billion<\/a> \u2014 has yet to go, and where \u201ctraditional hypermarkets\u201d \u2014 as Shin refers to physical grocery stores in the country \u2014 have yet to make any major headway.<\/p>\n \u201cIt\u2019s\u00a0only the taditional hypermarket giants like e-mart that are starting\u00a0to invest online, but if you look at pure online players ,there is no Amazon Fresh or Ocado (which operates in the UK),\u201d he said in an interview. \u201cIt\u2019s a wide open market.\u201d<\/span><\/p>\n The reason for TMON\u2019s\u00a0shift is simple: today, the company competes fiercely against Coupang in the area of general merchandise online, which currently accounts for 70 percent of TMON\u2019s business but at a less good margin because of competition. Then another 20 percent of its business is accounted for in travel purchases. The remaining 10 percent is groceries:\u00a0Shin said that consumers in Korea purchased 8.5 million unique products on its platform, accounting for 17 percent of the population. Groceries today account for around five percent of that. B<\/span>ut, he added, groceries are by far growing the fastest.<\/p>\n And it\u2019s an important lever to get people to come to TMON for other produts, too: Shin says the grocery introduction has given the company a three-time lift in frequency of visits to the site.<\/p>\n \u201cIn order to buy groceries, you have to visit a store 2-3 times a week,\u201d \u2014 clearly different shopping habits from the U.S. where the \u2018weekly\u2019 shopping trip, or one every two weeks, is often the norm \u2014 \u201cbut fashion-related purchases usually only take you to the store once a month. You refill on water and milk twice a year, so people come to TMON way more than others, and we wanted that to be our traffic driving anchor.\u201d<\/span><\/p>\n Ticket Monster first made a name for itself when it was founded in 2010 as having a very mobile-first approach to e-commerce, unsurprising given that Korea is one of the most active mobile markets in the world, and a leader in the trend of people shifting all of their computing away from PCs and to the screens in their pockets.<\/p>\n The company started as a daily deals site (similar to Coupang, in fact) and it was for this reason that \u201cit made a lot of sense to join forces\u201d when another daily deals site, LivingSocial, came knocking.<\/p>\n However, as\u00a0TMON\u00a0continued to evolve\u00a0its business away from daily deals and pivoted to more of a marketplace selling lots of items, and LivingSocial dealt with its own business issues, \u201cit came to a point where we were strategically very different and no synergies and the mother company was very risky from a financial standpoint so we asked them to sell us to a more stable partner.\u201d (Ironically, this is also the evolution that Groupon and LivingSocial \u2014 which Groupon acquired last year \u2014 also made, but at a slower pace.)<\/span><\/p>\n Shin and other execs and investors tried a management buyout at the\u00a0point that LS was divesting, but Groupon became the buyer because of the timing of the deal. \u201cGiven the emergency situation [only a few months of runway left], someone had to buy us with little due diligence,\u00a0who already knew a lot about us, and that was Groupon.\u201d<\/span><\/p>\n But, as so often with rebound relationships, after a year together all the new union did\u00a0\u201cwas reaffirm to\u00a0us that we were\u00a0unlike each other from a strategic perspective,\u201d he said, but not in a bad way. \u201cIt felt like a great time because TMON\u00a0was a leading e-commerce company in Korea and felt like we had a bright future.\u201d<\/span><\/p>\n Since then the company has, prior to today, raised about $120 million in rounds of $70-80 million and $40 million. Simone is a new investor on the scene \u2014 and while some might question the solidity of investment choices made by new investors, Shin and TMON have a philosophy for\u00a0how they approach this:<\/p>\n \u201cEvery round we\u2019ve tried to partner with a blue chip name, and with a local partner. The\u00a0spinout was with KKR and an investor in Asia\u00a0to form a consortium, and this time we also made the same effort. KKR participated along with a\u00a0bluechip sovereign wealth fund [which TMON is not naming but if you follow activities of sovereign wealth funds you might be able to make a good guess], and Simone, a local fund that will be less known in the world but has a network that can help TMON\u00a0with the sales process and operations.\u201d<\/span><\/p>\n \u201cTMON has been a proven leader in Korea\u2019s e-commerce market, and we are excited to see the company continue to enhance its competitiveness and expand into new and lucrative areas keeping the customer experience at its core,\u201d a Simone Management spokesperson said.<\/span><\/p>\n This doesn\u2019t mean that TMON is not ruling out mergers and acquisitions in the future. The landscape in Asia is filled with a lot of strong national leaders when it comes to e-commerce \u2014 looking at India, Turkey, China, and the Middle East you can see companies like Flipkart and Snapdeal; Hepsiburada; Alibaba and Taobao; and Souq.<\/p>\n That essentially presents an opportunity to the large multinational players to buy these to expand their footprint, as Amazon has done with Souq<\/a>; or for some of these smaller players to combine to get more economies of scale. In the case of TMON, South Korea has only 50 million people, so there is a limit to how big it can be on its own. Interestingly, Shin tells me that he has talked with Amazon, although it was a long time ago: when LS was looking to sell the company, Amazon \u2014 as a shareholder of LS \u2014 briefly looked as a potential buyer.<\/p>\n The company is not yet profitable: Shin told TechCrunch that this is still a couple of years away.<\/p>\n","protected":false},"excerpt":{"rendered":"![\"\"](\"https:\/\/tctechcrunch2011.files.wordpress.com\/2016\/05\/south-korea-gangnam-startup-distric.jpg?w=680\")
After an M&A rollercoaster that involved getting acquired by LivingSocial and then Groupon\u00a0(before getting spun out again), Korea’s Ticket Monster, a mobile e-commerce marketplace, today is announcing a major cash injection to boost its chances as an independent company in a highly competitive, tech-savvy market.
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