Several South Korean startups are ramping up infrastructure investment despite a funding slowdown, betting that direct control over logistics and technology systems will give them a competitive edge in a crowded and fast-moving market.
Mine Is, the operator of secondhand fashion e-commerce app Charan, expanded its inspection and logistics center in Namyangju, Gyeonggi Province, to 4,100 square meters in June 2024 — less than a year after opening a 2,300-square-meter facility. Over half of the 15.4 billion won ($11.3 million) raised to date has gone into infrastructure.
“In the early days, we outsourced logistics, but it led to issues like shipping errors and poor quality control,” CEO Kim Hye-sung told the Chosun Ilbo. “We decided to handle the full logistics process in-house, even during a funding winter, believing it would give us a competitive edge. As a result, repurchase rates have improved.”
Industry experts say more startups are turning to such “counter-cyclical” investments as consumer expectations rise and marketing alone becomes insufficient to secure users.
Delivus, founded in 2021, offers AI-powered logistics services to e-commerce firms and specializes in same-day delivery for orders placed before 2 p.m. The company built a 5,300-square-meter logistics center in Icheon last December — expanding its capacity fivefold to extend coverage beyond the Seoul metropolitan area. The move increased its daily handling volume from 30,000 to 100,000 parcels.
“With delivery competition heating up, logistics startups also need to invest in infrastructure,” said CEO Kim Yong-jae. “We’re now the first pure-play logistics startup to expand into areas like Cheonan and Asan.”
The infrastructure push comes amid intensifying delivery speed wars led by major players such as Coupang and Naver.
Other startups are investing to maintain market leadership. Lifegoeson, which operates the on-demand laundry platform LaundryGo, built a 12,000-square-meter smart laundry facility in Gunpo in 2022 and has since invested 10 billion won in the plant. Recent upgrades include RFID-enabled tracking and automated packing and shipping systems, funded by an additional 2 billion won.
“Automation is about long-term profitability and market control, not short-term cost,” said CEO Cho Sung-woo. “With economic uncertainty, rising labor costs, and stiff price competition, it’s more important than ever to control key operations in-house.”
The company also opened a 5,000-square-meter facility in Paju last November to handle commercial laundry from hotels, gyms and salons.
Infrastructure spending is also expanding into tech sectors. AI education and cloud platform startup Elice raised 20 billion won in global funding last year and plans to allocate a large portion to build an AI data center in Busan — a first for a Korean startup.
The facility will require a large volume of high-end AI chips, which typically cost tens of millions of won each. Despite the steep costs, Elice says it is well-positioned after securing chips early, when prices were lower.
“We’ve been in this space since 2015 and have stockpiled AI chips in advance,” a company spokesperson said. “We’ve also partnered with local chipmakers like Rebellions and FuriosaAI to ensure stable supply.”
