Althea, a Korea-based company that exports and sells cosmetics and beauty products to Southeast Asia, has closed a $3.5 million Series A round for expansion.
A report co-authored by Google this week tipped Southeast Asia’s internet economy to grow six-fold to reach $200 billion annually in the next decade, with e-commerce set to account for over 40 percent of that figure. But, with a cumulative population of over 600 million, the region is already seen as lucrative opportunity for many online retailers — among them, Alibaba recently invested $1 billion in Rocket Internet-backed Lazada.
Althea, which was launched in July 2015, aims to take advantage of the popularity of Korean culture — such as K-Pop and Korean drama series — in the region. Founded by ex-Ticket Monster duo Frank Kang and Christopher Cynn alongside CFO Jae Yoon Kim, the Korean startup sells to consumers in Indonesia, Malaysia, Singapore and Philippines with plans to enter Southeast Asia’s two other major markets — Thailand and Vietnam — before the end of this year.
This new funding round is provided by a range of investors that include Mirae Asset Ventures, Posco Ventures, 500 Startups, Tekton Ventures and Cherubic Ventures with the aim of carrying out that market expansion, adding to the company’s 25 staff with new hires, and investing in marketing and logistics.
There are plenty of companies also exporting Korean beauty products. The most notable example is Memebox, which graduated Y Combinator and has raised close to $30 million from investors, but Membox is focused on Western markets while Althea is looking only at Southeast Asia for now.
The startup prides itself on bringing new products to market in Southeast Asia first thanks to a sourcing team on the ground in Korea, CEO Frank Kang told TechCrunch in an interview. That’s important for beauty brands in Korea, which Kang pegs at 10,000, because they need a dedicated route to overseas sales.
“Our plan is to really build a brand, so we’re really focused on trendy items with a lot of potential [and] products that have not been introduced yet,” Kang explained. “The aim is to be the number one marketing generation platform for Korean brands in Southeast Asia.”
The past year of work seems to be going well, with Althea claiming 500,000 monthly unique visitors and an annualized run rate of over $10 million in revenue. The company said it is growing at 30 percent per month and is on track to reach profitability by the end of this year.
Althea, which has an office in Kuala Lumpur, Malaysia, but exports all products directly out of Korea, is solely focused on Southeast Asia for now, but Kang admitted that it could expand its horizons in the future.
“Our business is scalable so we can consider any market and any country, but we want to focus on Southeast Asia because it is the second largest region for Korean exports behind only China. We really want to conquer this market first [since the] competition is stronger in China and the U.S.,” he said.
“We need to grow to scale first, then we could consider other parts of the world but that’s the long term future,” Kang added.
More immediately, Althea plans to introduce its own label products by early next year. The company is in the early stages of working on this now, but Kang admitted that the startup will probably need to raise another round of funding in order to bring its own brand to market.