This article was displayed on the ChosunBiz MoneyMove site on April 8, 2025, at 4:09 p.m.
The luxury distribution platform Must It is facing difficulties in attracting new investments. The entry of Balaan, the market leader, into the corporate rehabilitation process has completely frozen investment sentiment towards luxury platforms. Recently, it has been noted that the demand for advance payments from entry companies has increased, putting more operational pressure on them.
According to the venture capital (VC) industry on the 8th, Must It has not secured a single new VC investor for over two months since starting its Series C investment round in February. Including a corporate presentation (IR) last year aimed at a small number of institutional investors, it has been four months.
Recently, Must It has shifted its focus from securing financial investors (FIs) to strategic investors (SIs). Due to the economic recession, the demand for luxury purchases itself has decreased, making luxury distribution platforms unable to attract FIs. Must It, having turned its focus to securing SIs, has selected Samjong KPMG as its investment consulting firm.
Must It stated that "the focus is on building long-term growth partnerships based on meaningful equity participation, not short-term liquidity," but observations in the market suggest that securing SIs will not be easy either. Must It has not yet determined the scale of the investment it is seeking.
The situation with Balaan is cited as the biggest obstacle. SILICON2, which had participated as an SI for Balaan and received attention, is at risk of losing its entire investment. In particular, one month after investing 7.5 billion won in convertible bonds, a settlement failure occurred, and simultaneously, the corporate rehabilitation process began.
A relationship in the VC industry said, "It is questionable whether there are investors willing to pour money into luxury distribution platforms under the current circumstances," adding that "there was an acquisition proposal at a valuation of 20 billion won early in Must It's Series C investment round, but discussions were completely halted after the Balaan situation."
The valuation itself is also considered a hurdle. This is because Must It's management environment has deteriorated due to the Balaan situation. The luxury distribution platform secures liquidity by utilizing the time lag between product sales and payment to entry companies, but recently, as settlement failures have increased, demands for advance payments from entry companies have also risen.
The expansion of Must It is expected to accelerate further with advance payment demands. If the scale of advance payments increases, platform operators will find it difficult to expand their sales products. Recently, it has been reported that entry companies have begun demanding more than 30% of the minimum delivery amount as advance payment.
Must It's sales have already decreased. As of 2023, Must It's sales amounted to 24.98 billion won, a nearly 25% drop from 33.1 billion won in 2022. Although operating losses have slightly decreased from 16.8 billion won in 2022 to 7.8 billion won in 2023, the company has recorded operating losses for three consecutive years since 2021.
In the industry, it is believed that Must It will eventually have no choice but to carry out fundraising of investments that are secured against a significant reduction in its valuation. This is likely to be worse than Balaan, which saw its value drop to one-tenth of its previous valuation of 300 billion won.
Must It's corporate value has already fallen to around 160 billion won, less than half of the valuation recognized during the last fundraising. CJ ENM, which became a new investor in 2022, valued its 4.8% equity at 19.9 billion won, but reduced the book value to 8 billion won by the end of last year.
Meanwhile, the Balaan situation appears to be extending beyond Must It to the entire luxury distribution platform sector. The luxury distribution platform Gentay has temporarily halted its fundraising plans that were scheduled for the first half of this year. The assessment was made that attracting new investments at this stage would be difficult without performance improvements or achievements.