The Startup They Rejected Became a $3 Billion Delivery Business

The founder had already been told no, and he had other offers. He came back anyway, with another update on his small startup in Korea, and then another.

The startup was Woowa Brothers, a small Korean food delivery company. Ho Nam, the co-founder of the venture firm Altos Ventures, says his firm had turned it down. The founder was a designer and a failed entrepreneur, without an impressive background. What he had was persistence.

As Ho tells it, Altos got "a second and a third chance" because the founder kept returning, and because a friend of the firm kept pushing him to do it. That friend was a successful entrepreneur, a seed investor in Woowa Brothers, and an investor in Altos funds. He kept telling the founder to go back to Altos, even after the rejection and even though the founder had term sheets elsewhere. Ho says the firm is grateful he did.

This is a story about how the largest investments often start as the smallest ones. When Altos finally said yes, Ho said the company was "doing a couple hundred thousand dollars a month in revenue." The partners thought it might grow to 2 million dollars a month, or 24 million dollars a year. Ho said a business that might reach 24 million dollars in Korea was not the kind venture firms normally back.

They backed it anyway. The founder kept growing, and then he outgrew his own expectations. He told Altos he did not think he could build a 100 million dollar company, and suggested they replace him. The company kept growing past that mark, and Ho said, "then it became a billion dollar business."

Altos sold around that time. Woowa Brothers, the Korean food delivery business, kept going. It is now a business of more than 3 billion dollars, with what Ho described as "multiple hundreds of millions of dollars in profits in just the food delivery business." Ho described it as "the most profitable large food delivery business in the world," outside of China, which he called a different universe. It is now part of Delivery Hero, the food delivery group that acquired it.

Ho says many of the firm's best investments looked small at the start. His conclusion is that it is worth staying with determined founders, even when the early numbers point to a modest outcome, because some of those companies keep expanding beyond what anyone planned.