The Seoul-based outfit previously raised a total of $34 million and expects to close the transaction by the end of September
Proptech start-up Dongnae said that it plans to acquire Stevens, a South Korean company that operates co-living business Dears. The two companies did not disclose the acquisition price, but Dongnae said it will purchase Stevens with a mix of cash and equity. The Seoul-based proptech outfit previously raised a total of $34 million, including a $21 million Series A round it announced last year. Dongnae expects to close the transaction by the end of September. The company’s investors include the likes of NFX, Daol Investment, Hana Financial, MetaProp, Maple VC and WeWork co-founder Miguel McKelvey.
Dongnae’s primary product, Dongnae FLEX, offers a furnished apartment rental on its platform with flexible lease terms for as short a period as four weeks and lower rental deposits. The addition of Dears will allow the company to upgrade the Dongnae FLEX service, manage properties “with a collective AUM of over $400 million,” and span 90 apartment complexes across Seoul and Pangyo, where a host of tech firms, including Kakao and Naver, are located. Dears Pangyo has more than 520 studio flat units in Pangyo.
The outfit also will co-manage the Dears Myeongdong building in Seoul alongside Xi S&D. Dongnae will manage commercial spaces of Dears Myeongdong, consisting of B1, 14F and the rooftop, co-founder and CEO Matthew Shampine said, adding that Xi S&D will operate Dears Myungdong’s 112 units that offer both short- and long-term stays.
Dongnae says this is its first acquisition. The current leadership team at Stevens will join Dongnae to support expansion and continue to build on their progress to date. “We are in active discussions with a number of landlords and land developers to open more buildings to be operated as and through Dongnae,” Shampine said.
Former WeWork executives Shampine and Insong Kim co-founded Dongnae in 2020 to digitise South Korea’s fragmented real estate market. With its signature lower rental deposits on a flexible, short-term basis, the co-founders want to tackle Jeonse, the country’s unique residential rental system that allows tenants to rent an apartment with a large lump sum deposit, which is about 70% of the house valuation, without paying monthly rental fees. “Since our Series A in March of 2022, we have been focused on growing our real estate portfolio, getting customer feedback, and building the necessary front- and back-end technology to truly create a better way to rent homes in Korea,” Shampine said.
The company has invested heavily in enhancing the customer experience since last year and says it has digitised the entire procedure instead of the typical long, paper-filed leasing process and launched its own digital real estate consultant Suzie by integrating artificial intelligence into its platform. Like a chatbot, Suzie answers prospective residents’ questions about housing or Dongnae’s units in any spoken language. “From Adam Neumann’s Flow and companies such as Mint House, Zeus Living, and Blueground in America to Asian and European start-ups like Cove and Habyt — there has been great innovation in the residential rental market around the world over the past few years,” Shampine said in a statement. “Our team is committed to bringing about a better way to rent here in Korea.”
