According to Laundrygo CEO Sung-woo Cho, mom-and-pop stores and franchises – mostly offline – make up about 95% of the laundry market in South Korea. But his South Korean-based start-up aims to digitize the country’s laundry industry. How? Through an on-demand mobile application that allows users to place an order for laundry collection and return and dry cleaning within 24 hours. The outfit also supports laundries and smart factories for washing and drying clothes.
Investors liked the idea. Laundrygo today announced it has completed a $37 million (KRW 49.5 billion) series C funding round led by private equity firm H&Q Korea with returning investors SoftBank Ventures, Altos Ventures and Aju IB. New investors such as KB Securities, Hanwha Securities, Badgers Investment and Pebbles Investment as well as strategic investor, Korean fashion platform Musinsa also participated in the round.
According to sources who wished to remain anonymous because the terms of the deal are confidential, the startup’s valuation is now estimated at $254 million (KRW 350 billion), down from $110 million (KRW 150 billion) in September 2021. Laundrygo declined to comment. on the matter, but Cho confirmed the Series C financing brings the total raised to approximately $73 million in equity and $14.5 million in debt financing.
Cho, a serial entrepreneur, launched the B2C on-demand service Laundrygo in 2019. Cho previously founded Baemin Fresh, a subscription-based fresh food delivery service platform, which was acquired by Woowa Brothers, operator of the Baedal Minjok food delivery app, in 2015.
He said the company’s inspiration came from an unlikely place. After leaving his job as CEO of Baemin Fresh in 2017, Cho headed to the United States to rest and recharge; while in the States, his rental car was stolen in downtown San Francisco.
“The thief broke the window and stole all my stuff, but he didn’t take my laundry, which I put in my Amazon Fresh bag,” said Cho. It occurred to him that “ordering and delivering laundry services via an app might be safer than I thought if even the thief didn’t want the laundry”, including what he imagined was laundry placed outside a customer’s house.
He quickly got to work on the idea, setting up meetings with laundry experts on the East Coast and visiting laundromats in New York.
Laundrygo currently operates three main businesses: in-app laundry collection and delivery services (Laundrygo), B2B laundry services for hotels (Laundrygo Business) and laundry services (Laundry24).
The startup also runs a garment alteration service, LaundryX, and has built an AI-powered laundry control system that automatically sorts laundry. Cho told TechCrunch that his laundromat is not only a self-service facility that allows users to wash and dry clothes using washing machines and tumble dryers, but also has a touchless dry cleaning machine in the laundry space that can also be used by consumers.
The Series C round will help the startup develop smart factory technology and invest more in the laundry business, which Cho expects to grow, in part due to rising labor costs.
Laundrygo also has plans for geographic expansion. Although it has just opened its 100th laundry in South Korea, it plans to open its first laundry, Laundry24, in New York next year. A move to Japan is also being considered. Indeed, Cho sees huge opportunities in the global on-demand laundry market, which is expected to reach $128.5 billion by 2026, up from $18.7 billion in 2019, according to a research report.
More acquisitions may also be on the horizon. For example, last year Laundrygo acquired A+ Machinery, a US-based laundry solutions company, to start a smart factory business.
All cleaning is now done on-site at Laundrygo’s smart factory, enabling the company to handle every step from pick-up, cleaning, sorting, assembly and delivery. In addition, Laundrygo claims to have developed and uses an environmentally friendly detergent.
Cho said the company – which has acquired two other companies in the past two years – will continue to acquire if other laundry related businesses can create synergies with Laundrygo. (He suggested that he might be interested in acquiring a company that handles clothing sustainably or analyzes clothes or clothing materials and determines their optimal washing cycles.)
He said that Laundrygo has already built its service in such a way that it collects data on the type of brands, materials and information about washing clothes, and that this data should enable the startup to diversify its business.
As for the moment, according to Cho, Laundrygo had sales of 4.4 billion won ($3.3 million) in October, which he said was more than 20 times the revenue the company reported a year ago. Overall, he said, the company, which has more than 130,000 registered users in South Korea and more than 500 employees, has tripled its annual sales since 2021.