[Funding] Alchera's Growth Pace Slower Than Expected

Slower-than-Expected Revenue Growth at IPO
Operating Funds Raised Through Shareholder-Allocated Capital Increase Amid Large Operating Losses

[Asia Economy Reporter Hyungsoo Park] AI video recognition company Alchera has launched a large-scale fundraising effort. Since its listing on the KOSDAQ market in 2020, the company has grown more slowly than expected and has not turned a profit. Amid increasing operating losses, Alchera has decided to conduct a paid-in capital increase to raise operating funds for promoting facial recognition AI solutions, abnormal situation detection AI solutions, NFT business, and an integrated senior home healthcare platform business.

According to the Financial Supervisory Service's electronic disclosure system on the 5th, Alchera plans a rights offering followed by a general public offering of forfeited shares, allocating 0.287 new shares per existing share. The planned issue price per new share is 10,650 KRW, with a total issuance of 4 million shares.

The raised funds will be invested in new business initiatives. In June, the company established Bayer and expanded its business into the healthcare sector. It is developing a platform that matches elderly home care service demanders and care providers. The business model involves receiving commissions from care providers. They also plan to build a system that uses AI technology to monitor elderly individuals 24/7 and relay emergency situations to experts. The domestic home care service market was estimated at 6 trillion KRW as of 2021 and is expected to grow over 17% annually. Of the raised funds, 13.5 billion KRW will be invested in hiring additional development and operational support personnel, establishing visiting care centers, and marketing expenses.

In July 2020, Alchera jointly invested with its largest shareholder Snow to establish Pala. Pala aims to create a user-friendly decentralized finance (DeFi) ecosystem that connects participants' influence to profits through a transparent virtual asset ecosystem using blockchain, ultimately maximizing and returning value. In January this year, they launched the beta version of Pala Square, a community-integrated NFT marketplace. In May, they signed a strategic business agreement (MoU) with the metaverse platform ZEP, promoting various NFT projects and communities based on metaverse implementation technology linked with blockchain and NFTs. Of the raised funds, 2.5 billion KRW will be invested in operating funds and marketing expenses for the NFT marketplace Pala Square.

Funds will also be invested in facial recognition AI solutions, abnormal situation detection AI solutions, and AI training data production businesses.

When Alchera was listed in December 2020, it expected to achieve operating revenue of 15.5 billion KRW and operating profit of 2.4 billion KRW in 2021. However, last year it recorded operating revenue of 10 billion KRW and an operating loss of 11.1 billion KRW, showing a significant gap.

The company explained that the gap arose because intensified competition for ACS products did not translate into sales. Although they expected to turn a profit, actual sales sluggishness and increased operating expenses led to large operating losses. To secure competitiveness, they expanded hiring and scaled up AI training data production operations, significantly increasing operating costs. The large discrepancy between projected and actual performance indicates that planned business activities were not executed as intended.

While the company plans to use the large-scale funds for R&D expenses, domestic marketing, and overseas subsidiary operating costs for overseas sales, it is uncertain whether the expected results will materialize.

In the first half of this year, Alchera recorded cumulative operating revenue of 2.5 billion KRW and an operating loss of 10.5 billion KRW. At the time of listing, it had expected to achieve operating revenue of 34.9 billion KRW and operating profit of 8.8 billion KRW in 2022.

The largest shareholder Snow and related parties plan to use proceeds from selling subscription rights certificates to participate in the subscription. They are expected to acquire about 10% of the allocated new shares. A decline in their shareholding ratio after the capital increase is inevitable. Including related parties, the shareholding ratio is expected to decrease from the high 30% range to the low 30% range.

This content was produced with the assistance of AI translation services.