Amazon Web Services (AWS) partner Megazone Cloud seeks to raise additional money from investors a year after its first round of funding to fund its expansion into overseas markets.
Megazone Cloud is raising a Series B round with setting its valuation at 600 billion won, roughly 1.5 times the value of the cloud services provider in its previous funding round a year ago. Successful fundraising this time could increase chances for the company to be valued at more than one trillion won ($1 billion) in its next round of funding, which then would make it a unicorn.
The company raised 48 billion won early last year in its first funding round that valued it at 400 billion won. The round was led by NAU IB Capital and NongHyup Bank, with each investing about 20 billion won of redeemable convertible preferred shares (RCPS) issued by the company. Other investors included Korea Development Bank (KDB) and KB Investment.
Megazone Cloud, Korea’s first AWS premier consulting partner, was split off from its parent Megazone in July 2018. The company’s more than 900 customers include major companies like Nexon, LG Electronics and SK Planet. AWS has a market share of 40 percent across the globe and 90 percent in South Korea.
Megazone Cloud is growing rapidly along with the growth of the cloud services market globally. Before it was separated from its parent company, revenue increased fivefold to 110 billion in 2018 from 27 billion won in 2014. In 2019, the first full year after the split-off, the company recorded revenue of nearly 210 billion won.
The company also has strong prospects for further growth. According to Gartner’s report released last November, the worldwide public cloud services market is forecast to grow 17% in 2020 to total $266.4 billion.
Megazone Cloud is focusing on growing in size, a move intended to gain market share faster than its rivals. Last year, it formed CloundGram in a partnership with LG CNS, and bought 75.3 percent of Zenith & Company, a partner for Microsoft Azure, for 14.4 billion won. The company plans to set up its offices in Singapore, Indonesia, Taiwan, India and the Philippines.
However, an unclear path to profitability may be worrisome for some investors. Megazone Cloud’s operating loss increased roughly fourfold to 15.2 billion won in 2019 compared to 2018. (By reporter Jo Se-hun)