Deal focus: Korean start-up disrupts the laundry

Han Kim, a managing director of US-based VC Altos Ventures, is housebound in Seoul. Having flown in last week, he is adhering to the mandatory 14-day self-quarantine period for inbound travelers to Korea. But in-person meetings are already back on the agenda.

Seung-Woo Cho, CEO of Laundrygo, might feature prominently on Kim’s call list. Altos recently participated in a KRW17 billion ($13.9 million) Series B round for the company, only 12 months after providing the Series A. “He is a person that we've known very well so we wanted to give him a chance with his latest venture,” states Kim.

Laundrygo, which allows users of its app to get next-day delivery of freshly laundered clothes, could make in-home washing machines and dryers redundant for a large group of users. A year back, though, it wasn’t clear whether Cho’s idea would work out. 

As a founder, he had pedigree. Cho previously ran a next-day fresh food delivery service that was acquired by Woowa Brothers, the developers of Korea’s most popular food delivery app. However, fast-rising rival Kurly outlasted Cho’s business.

Laundry became his next focus, specifically a technology-enabled next-day delivery service. Users made bookings via the app and left clothes for collection outside their doors in smart laundry collection boxes. These boxes could be secured through Bluetooth connectivity.

Even as Altos backed the seed round, no one knew if Koreans would subscribe or become regular users of the service. After all, the streets of Seoul are filled with laundry shops.

“It was an absolute success,” says Kim. “People in other parts of Seoul were lobbying for the company to set up the service in their neighborhoods. The retention rate was so good.”

Laundrygo currently serves eight districts in the western part of Seoul as well as Tongyeong, a nearby city that is a prominent start-up hub. The immediate plan is to open more large-scale laundry facilities – referred to as factories – and boost coverage of Seoul.

The company is not profitable yet but just before the latest round, Cho claimed to have achieved positive gross margins. A key next step is automating more of the laundry processing service, which Kim said is already a lot less manual than it used to be.  

Kim feels fortuitous for having discovered the start-up. He grew up as part of an immigrant family that ran a laundry service in the middle of an Italian neighborhood in Chicago. Cho has given the business model another twist, once again demonstrating the ingenuity of Korean entrepreneurs. The idea might even be exportable, but the domestic market is currently Laundrygo’s priority.

“Once we get another center done then we will have to see if we can scale this across Korea,” Kim says. “I’m guessing non-Korean cities may be two or three years from now because we don't know if the model will work.”

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• Topics
• North Asia
• Early-stage
• Technology
• South Korea
• Altos Ventures
• TMT