Dongnae, a South Korea-based startup that helps tenants find high-end apartments, closed $16.4 million (KRW 20 billion) in equity and $4.1 million (KRW 5 billion) in debt. The Series A funding brings its total funding to approximately $34 million (KRW 40 billion).
Investors include NFX, Daol Investment, Hana-Magna, Hana Financial, MetaProp, Fursys, Han River Partners, Flybridge and Maple. WeWork co-founder Miguel McKelvey also participated in the equity financing.
Matthew Shampine, a former WeWork executive who previously served as chief executive of WeWork Asia and Insong Kim founded Dongnae in 2020.
Shampine, co-founder and CEO of Dongnae, told TechCrunch he wants to work on something meaningful after leaving WeWork. Shampine noticed that residential real estate was big in South Korea, but also knew he didn’t know enough, especially about the local proptech space, he said. Matthew spent the next two weeks hosting meetings to talk to industry folks in local residential real estate, proptech and startup space.
“Real estate has been my life for the past 10 years so it has always been a big focus and before coming to Asia I had worked with Adam on the initial planning for WeLive which sparked a interest at the time in residential,” Shampine told TechCrunch. “Thinking back to my experience finding apartments in New York and then starting over in Korea, I began to piece together what would become my next venture.”
Dongnae says his first mission is to tackle South Korea’s unique residential rental system, called “Jeonse”. This rental agreement allows tenants to rent an apartment with no (or little) monthly payment by paying a large lump sum deposit that averages $600,000 (KRW 700 million) in Seoul for a two-year lease.
Dongnae FLEX offers premium apartment rentals that will reduce typical tenants’ security deposits by approximately 98%. Shampine said the company is working with landlords to provide premium apartments to tenants with a low deposit and fixed monthly rent.
Additionally, its Dongnae PLUS allows tenants to access in-home services, ranging from appliance and furniture rentals to scheduled internet/cable and recurring. To provide a fully online experience, it offers 3D virtual tours of its units, powered by Matterport, and tenants can sign the lease via an electronic contract.
“We are excited to make the stunning homes accessible and affordable for renters in Korea. Almost all rental properties have a high deposit, with less than one percent of units having a deposit below $16,000,” Shampine said in a statement. “Additionally, Dongnae FLEX is also a valuable solution for landlords and brokers, as it allows them both to increase their income potential on their apartments.”
Dongnae says he currently manages over 60 of the top apartment complexes in Seoul and Pankgyo in South Korea’s Silicon Valley.
Two months after announcing its seed expansion round in May 2021, the startup has pivoted the company. “Almost everything has changed since we pivoted the business in late July 2021,” Shampine said.
All of the apartments listed on its website are Dongnae-managed houses, which means that the company no longer has an external listing platform. The size of his team has doubled to about 40 people. Dongnae now has more than 80 official local brokerage partners which the company calls Dongnae Premium Partners, according to Shampine.
“Dongnae’s partners work closely with local brokers and other proptech platforms because our offering is much closer to a fintech platform that helps clients access premium managed apartments across the city with a significantly lower down payment,” Shampine said.
Over 80% of its users are local Koreans; most of them are young professionals working in the city, Shampine noted. As Korea continues to ease COVID restrictions, Dongnae is seeing a steady increase in the number of overseas customers, he added.
Shampine said its offer is ideal for business executives and foreign diplomats, given the low housing deposits and difficulties in moving large amounts of currency across borders. Moreover, its resident management service is available in Korean, English, Chinese and Japanese, which appeals to foreigners moving to Korea.
With the Series A product, the company plans to accelerate its geographic expansion in the Seoul metropolitan area, strengthen its relationships with local brokers, and invest in technology and data to develop its proprietary tools for users. . Dongnae will launch the market for iOS and Android applications and home services this year.