[UP&DOWN] Two Startups Popular in VC Investment Face Mixed Fortunes Amid Funding Crunch

Trusted Growth Stock CareNation's Leap
Cash-Strapped Promising Stock Sandbox Network

[Asia Economy Reporters Kwangho Lee and Soyeon Park] CareNation, a caregiver matching platform, is steadily expanding its scope. Targeting the senior care market, it is gaining prominence as a key player, accelerating its growth momentum. Despite the market downturn, it has secured various allies, including financial investors (FIs) and strategic investors (SIs), solidifying its position as the industry leader.

According to the investment banking (IB) industry on the 14th, CareNation plans to complete its Series B funding round by the first half of next year. Many existing shareholders have already decided to follow on with additional investments. Some new investors have also shown interest, which is expected to diversify the shareholder base further. Typically, the Series B stage is pursued to drive greater growth.

CareNation has secured significant funding over the years. In 2019, it raised 1.5 billion KRW in seed investment from Low Partners, Korea Credit Guarantee Fund, and HB Investment. The following year, in 2020, it completed a Series A investment round worth 6 billion KRW from LSK Investment, HB Investment, and Hana Ventures. Through such external funding, it laid the foundation for growth.

Last year, it completed a Pre-Series B funding round worth 15 billion KRW. Led by Samsung Venture Investment, LSK Investment, HB Investment, Hana Ventures, and Shinhan Investment participated. The involvement of various FIs attracted market attention. It also achieved the largest single-round investment amount in the same industry.

Following the Pre-Series B round, it secured consecutive bridge investments. It received investments from US-based venture capital (VC) Altos Ventures and Saehan Ventures, known for their twin investment moves. Along with follow-on investments from existing shareholder Samsung Venture Investment, it gained support from bio-specialized VC Daily Partners, further proving its growth potential.

CEO Kyunwon Kim founded CareNation in 2013. He learned the business working alongside his parents who operated a medical corporation and nursing home. While working at the nursing home, he obtained certifications as a social worker, nursing assistant, caregiver, and facility manager. Naturally, he became familiar with hospital management operations. Later, starting with hospital support consulting, he acquired a caregiving company to operate MRO (Maintenance, Repair, and Operations) supplies such as medical equipment and food ingredients.

Innovative Caregiver Matching Platform... Noted for Data Scalability, Steady Investment Amid Market Downturn
Solidifying Industry Leadership While Targeting Senior Care Market

Based on know-how accumulated over four years of operating a caregiving company, CareNation was developed. Through its application (app), it conveniently connects patients’ conditions and caregivers’ requests with the most suitable professional caregivers. It also provides comprehensive payment gateway (PG) services, enabling not only card payments but also allowing family members to register their own cards for split payments of caregiving costs.

HMC Networks is establishing itself as a key player innovating the entrenched caregiving market amid an aging society. It focuses on service advancement centered on experienced professionals in hospital medical and caregiving fields. Venture capitalists are paying attention to the potential for business expansion based on the large volume of data generated during service usage beyond just the caregiver platform.

CareNation signed a memorandum of understanding (MOU) with Samsung Fire & Marine Insurance to explore mutual synergies and joint growth, welcoming Samsung Fire as a strategic investor (SI). Both companies are developing new business models based on patient mobility data by leveraging their operational resources and expertise. They are accelerating the establishment of a healthcare big data center.

Recently, CareNation signed a contract to acquire ‘Eolshinsaesang,’ a specialized long-term care insurance service company, as a wholly owned subsidiary. Eolshinsaesang is the largest comprehensive elderly welfare service provider in Anyang and Uiwang.

A CareNation official explained, "The two most important pillars in the digital transformation of the long-term care insurance market are an ‘activated platform’ and ‘human and material resources specialized for the field.’" They added, "After extensive review, we have been searching for a specialized long-term care insurance service company to partner with CareNation."

This merger and acquisition (M&A) is CareNation’s fourth, following Jeilrak Food System (food ingredient distribution), Green Silver (offline caregiving), and CN Company (PG·VAN distribution). Attention is also focused on future expansion moves.

Meanwhile, the ‘Korea Caregiving Trend Report’ is also being published. CareNation Data Lab analyzes various caregiving service-related data collected through CareNation to derive market trends and statistics. By utilizing and reprocessing statistics from the National Statistical Office, it demonstrates the broad applicability of CareNation’s data.

Sandbox Network, Once a Promising Company, Restructures to Streamline Operations

Sandbox Network, which had been recognized as a leading MCN (Multi-Channel Network) company producing numerous YouTube stars, has finally initiated restructuring by implementing a voluntary resignation program. Despite being a popular startup enjoying years of prosperity, it has begun downsizing through restructuring and organizational improvement. Although it successfully attracted large-scale investments amid expectations of unicorn growth during times of abundant liquidity, it has faced difficulties in securing additional funding as the investment market’s capital flow dried up. A harsh survival process has begun. Restructuring takes three forms: downsizing, divestiture, and business discontinuation. Divested business units are subject to voluntary resignation, but if a buyer is found, employment succession may be negotiated. Even in cases of downsizing and discontinuation, a certain number of employees are subject to voluntary resignation.

Sandbox Network was established in October 2014 as an MCN company. Founder CEO Pilseong Lee holds 15.30% of shares, making him the largest individual shareholder. Famous influencer Heeseon Na (Dotty) holds 13.57%. Major shareholders include Neptune’s subsidiary Nexports (15.21%), TBT Global Growth No.1 Investment Association (7.95%), Daum Youth Startup Investment Association (7.28%), Nexon Korea (5.36%), and Company K Challenge Fund (4.31%). Over 400 creator teams such as Yubyeongjae, Dotty, Chimchakman, and Jonathan are affiliated. In seven years since its founding, it has grown into a large content company with over 60 YouTube and TikTok channels each having more than one million subscribers.

Aggressive Business Expansion Securing YouTube and TikTok Channels with Large-Scale Investments
Facing Challenges in Follow-up Funding Due to Deficit and Liquidity Crunch... Initiates Restructuring Including Voluntary Resignations

It has subsidiaries including ‘Sandbox Network Hong Kong,’ esports team ‘Sandbox Gaming,’ and film production studio ‘Dotty and the Eternal Tower Cultural Industry Limited.’ It has also ventured into game development, releasing the mobile survival battle game ‘Gongpo-ui Sullaejapgi’ (Fearful Tag), and is developing crypto games. With nearly 600 employees and annual sales exceeding 100 billion KRW, it is considered one of the top three MCN companies in Korea alongside Treasure Hunter and DIA TV.

Sandbox quickly succeeded in the MCN business in Korea, where YouTube was initially underdeveloped. CEO Pilseong Lee, known for his background at Google Korea, played a significant role in this success. Building on MCN success, it expanded into various fields. Leveraging large-scale investments, it actively operated five esports pro teams through its subsidiary SBXG. It also proposed the possibility of building a Web 3.0 ecosystem using NFT (non-fungible token) liquor. In this process, it planned to expand into metaverse business alongside gaming.

At the end of 2020, Sandbox secured 50 billion KRW in Series D funding, valuing the company at about 300 billion KRW. It raised 50 billion KRW then, with cumulative investments reaching about 90 billion KRW. Major investors include TBT Partners, KDB Industrial Bank, Stick Ventures, Q Capital Partners-JB Asset Management, IBK Industrial Bank, Samsung Venture Investment, BSK Investment, Cresco Lake Partners, and DS Asset Management.

However, focusing on unplanned external growth led to a situation where the company’s survival was threatened without restructuring. Aggressive business expansion caused hiring and business areas to exceed manageable levels. Subsequently, it has faced difficulties in securing follow-up investments. As market conditions worsened, investors began to take a conservative view of the future value of deficit companies. While investments based on future growth were common during times of abundant market liquidity despite low immediate profitability, the current environment of rising interest rates and economic downturn has intensified liquidity shortages, shifting preference toward investments proven by numbers. Especially companies positioned behind Series B and C investments find it difficult to secure additional funding without demonstrating profitability. Sandbox posted deficits of 7.3 billion KRW and 12.1 billion KRW in 2020 and last year respectively, and is expected to record a deficit exceeding 20 billion KRW this year.

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