The acquisition of Re:clo, a startup that collects used clothing and had been pursuing mergers and acquisitions (M&A), has been finalized. Re:clo, which entered rehabilitation proceedings about 1 year and 8 months after securing Series A funding, moved to normalize management through M&A. Existing investors now have a chance to recoup their investments.
On the 8th, according to the startup sector and legal circles, a Fintech corporations that also runs a Blockchain business was selected as Re:clo's final preferred bidder. Re:clo submitted documents to the Seoul Bankruptcy Court reporting the letter of intent results and requesting approval for the selection of the final preferred bidder. Detailed procedures, including the court's approval, are underway, and the terms of the transaction have not been disclosed.
Launched in 2021, Re:clo is a startup that collects clothes consumers leave at their doors, inspects them, provides compensation, and sells marketable items online and offline. Revenue stayed at 380 million won in 2022 but jumped to 6.1 billion won in 2024, rising more than 15 times in two years, and in the same year it secured a Series A investment worth 3.5 billion won. Smilegate Investment, Sema Investment, Gentium Partners, and Big Basin Capital participated.
Smilegate Investment at the time invested in Re:clo, a company in the future environmental industry, through its ESG-dedicated fund "Smilegate Green Growth Fund No. 3."
However, Re:clo entered rehabilitation in less than two years after receiving investment. As it directly operated everything from door-to-door collection to inspection, sorting, storage, and resale, the organization at one point grew to more than 120 people, and fixed costs reportedly increased due to logistics infrastructure expansion. It is known that internal personnel issues and the collapse of external funding overlapped, leading to a liquidity crisis. As of the end of last year, Re:clo's current liabilities were about 3.59 billion won, five times its current assets (about 680 million won).
The buyer of Re:clo is a Fintech corporations that also runs a Blockchain business. The market is paying attention to the combination of heterogeneous businesses—finance/Blockchain and used clothing collection/sales. Re:clo's clothing collection and inspection system and online/offline resale channels, backed by a cumulative 4 million users and about 25.5 million items collected, could serve as a base for entry into the circular economy sector.
There is also talk that the payment and settlement technology held by the Fintech corporations could be applied to Re:clo's clothing collection, inspection, compensation, and resale processes. By using Blockchain to record clothing collection, inspection, and distribution histories and to enhance transaction transparency, the two businesses could establish points of convergence, observers said. Specific technology applications and service linkage plans are expected to be decided after the M&A process is completed.
As the M&A moves into the closing stage, attention is turning to whether existing investors can recover their funds.
An investment industry official said, "If a corporation goes bankrupt, investors can recover funds only if assets remain after debt repayment, but in a rehabilitation M&A, the acquisition price is raised based on the value that the corporations will continue, so the likelihood and scale of recovery can be relatively larger," adding, "However, because the acquisition price may be used first for debt repayment and there could be a capital reduction of existing shares, we need to watch further to see whether and how much will actually be recovered."