Korean Housing Startup Dongnae Raises $20M

Dongnae, a South Korean startup that aims to help tenants dealing with limited housing options, has raised 25 billion won (about $20.4 million) in a Series A funding round, KoreaTechDesk reported Friday (March 25).

The funding round brings Dongae’s total fundraising to about $33 million since it was launched two years ago. The company said it will use this latest round of capital to hire staff, develop technology and expand its services, according to the report.

In South Korea’s residential rental system, known as “Jeonse,” tenants can rent apartments with little-to-no monthly payments by making a one-time lump sum deposit. In Seoul, that deposit is about $600,000 for a two-year lease, the report stated. These Jeonse loans accounted for 41.2% of the increase in household loans in the banking sector in 2021.

Dongnae’s FLEX program provides curated rentals that lower the standard housing deposit by 98%. Meanwhile, the company’s Dongnae PLUS program offers a subscription style service that lets residents access appliance and furniture rentals, internet service and cleaning at a low cost, according to the report.

“Dongnae allows tenants to choose a good house without the burden of a high deposit,” said Min-geun Cha, head of the company, in the report. “Almost all rental houses have high deposits, so less than 1% of apartments for sale in Seoul require a deposit of 20 million won or less.”

In this market, Cha said in the report, young professionals, newlyweds and office workers who have high incomes but limited assets have few options when it comes to housing. Dongnae FLEX works for “customers who prefer active investment rather than binding money to a deposit.”

Earlier this week, PYMNTS profiled EasyKnock, a company whose Sell and Stay sale-leaseback program lets homeowners sell their property to EasyKnock, which then leases the home back — at prevailing market rental rates — to the occupant.

Read more: In Paycheck to Paycheck Economy, Some Mull Selling Their Home and Leasing It Back

The owner-turned-tenant can buy back the home down the line at a previously set price, or ask EasyKnock to sell the home and get the proceeds of that sale, minus the amount that EasyKnock has paid in connection with the home and other fees.