South Korea’s online grocery delivery startup Market Kurly is drawing attention with the company raising fresh funds from existing investors.

According to investment banking industry sources on April 7, Kurly, operator of Market Kurly, is currently finishing preparation to sign a contract to raise 200 billion won in funding. The firm’s existing shareholders including DST, Hillhouse Capital and Sequoia Capital are expected to execute the investment as soon as the contracting process is completed.

Market Kurly was valued at mid-900 billion won for the latest funding. The company initially tried to raise 250 billion won, but reduced the amount as it received lukewarm interest from new investors other than existing shareholders.

Last year, there was a rumor going around the market that Kurly will be put up for sale. The company and its CEO Sophie Kim denied the rumor, but some strategic investors reportedly reviewed internally the possible acquisition of Market Kurly. Indeed, it is said that few investment banks actually tapped some strategic investors including CJ and Kakao.

Market reactions to the possible sale of the company were lukewarm. Industry observers were questioning about Market Kurly’s sustainability as major strategic investors including Shinsegae and Coupang have already entered the dawn delivery service market while it has become more difficult for Market Kurly to meet the picky demands of foreign venture capitalists.

Also, Market Kurly hasn’t had a chance to prove its profitability yet. In 2019, the company posted sales of 428.9 billion won while its net loss more than doubled to 97.5 billion won from a year earlier.

“In order for Kurly’s aggressive investment in TV commercials and advancing its logistics system to bear fruit, the company will need to explain investors how it will improve its current profit model,” said an investment banking industry source, adding, “Kurly may have also thought that it would be hard to be acquired by a strategic investor or private equity fund until it proves its profit model.”

What is also notable is that only existing shareholders have participated in the latest funding. Private equity funds and strategic investors recently have been reluctant to invest in venture firms including unicorns due to low profitability.

Indeed, some strategic investors also reportedly raised questions about Kurly’s profitability during the process in which they reviewed their investment in the company. They seemed to have focused on how much additional money they will have to put into the company and how the company can improve its low-profit, high-cost business model.

In the meanwhile, a Kurly official said that the company can’t reveal any information on the funding until the transaction closes and nothing has been decided yet as of now.

(By reporter Choi Ik-hwan)