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Billion Dollar Unicorns: Yello Mobile Acquires its Way into the Club

Posted on Wednesday, May 25th 2016

Unlike most other startups that stick to their core offering and grow inorganically, South Korean Billion Dollar Unicorn club entrant Yello Mobile has gone the other way. Yello Mobile’s mission from the beginning has been to provide users with mobile apps that can be used 24 hours a day, 7 days a week. To deliver on that mission, Yello Mobile has been on an unending acquisition spree since its inception.

Yello Mobile’s Offerings

Seoul-based Yello Mobile was founded in 2013 by its current CEO Sanghyuk Lee, a former executive at South Korean Internet company Daum Communications Corp. Prior to setting up Yello Mobile, Lee had founded a retail loyalty service called MyOne Card Corp. He sold the company to South Korea’s Daum Communications for about $8 million in 2011. Lee then worked with Daum for around two years to help build a retail mobile app. But he realized that Daum was not yet ready for the fast approaching mobile world. So, he left Daum in early 2013 and set up Yello Mobile by reaching out to integrate several small, local mobile commerce companies. Yello Mobile began with a focus on providing hotel and restaurant recommendations along with information on local services and coupons. The name Yello Mobile was a take on “yellow pages”.

Driven by the initial success, Yello Mobile began to expand into other fields. Today it focuses on five key mobile-based businesses – Shopping, Media Content, Marketing and Advertising, Travel, and Online-to-Offline (O2O) business. Yello Mobile addresses these segments as SMATO. It hopes to expand internationally to become Asia’s biggest mobile media group. In the three years since being founded, Yello Mobile has acquired over 80 companies. The combined portfolio of companies under Yello Mobile have registered more than 25 million monthly users over 70 million downloads.

Some of its most popular apps are Coocha and Pikicast. Coocha is its daily hot deals app that offers access to e-commerce sites, online home shopping sites, online marketplaces, and Internet shopping malls. The app has been downloaded more than 14 million times and had over 7 million monthly active users as of September 2015. Within the media segment, Yello Mobile’s Pikicast is a widely known content platform that allows production and distribution of online content. Pikicast has recorded over 11 million downloads and is used by more than 2.7 million monthly active users who register more than 25,000 daily content views.

Yello Mobile’s Financials

Yello Mobile is privately held and its recent detailed financials are not available. Regional reports suggest that the company is operating at quarterly revenues of over $82 million, translating to an annual run rate of nearly $330 million. It turned EBITDA positive in the third quarter of 2015.

It has raised $177.2 million in venture funding so far with investments from Formation 8 and SBI Holdings. Its last round of funding was held in February 2016 when it raised $30 million from Japan’s SBI Holdings at a valuation of $4 billion. An earlier round held in December 2015 had also valued it at $4 billion when it raised $47.2 million from Formation 8.

Yello Mobile does not see its acquisition spree ending soon. Lee has already delegated the work of meeting companies and approving deals to a separate team and believes in his acquisitive model considering that giant IAC has also grown with more than 150 brands under its umbrella. His idea of acquisition is simple. Yello Mobile acquires companies valued under $10 million to achieve its objective of being the most valued mobile company from the region. It agrees on specific targets with each of these companies, and those that fail to achieve these goals are either shuttered or merged with other Yello Mobile companies. As part of its international growth, Yello Mobile is now looking to expand within the South East Asian region and is looking at prospects in Indonesia, Vietnam, and Thailand.

More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns.  Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.

This segment is a part in the series : Billion Dollar Unicorns


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