[Korean Startup Interview] Poolix: Making New Paradigm in the B2B Food Market Through Digital Transformation

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funding Stage : Pre-Series A
Raising Amount : KRW 2B
Desired Fundraising Timeframe : 3Q 2024

As of 2021, it’s estimated that South Korea’s foodservice industry encompasses around 800,000 businesses, making up 13% of the total industry. This figure is over three times higher per capita compared to the United States or Japan. While some businesses operate physical stores and serve food directly, the burgeoning delivery industry has led to an increase in companies that only have kitchen facilities and produce food.

In such a context, competition in the food and ingredient manufacturing and distribution sector has intensified. Yet, the majority of South Korea’s food B2B market consists of small businesses that largely depend on traditional sales methods. Poolix is an ambitious startup aiming to revolutionize the food industry by digitizing traditional ingredient procurement and distribution processes.

The domestic food B2B market features several competing platforms. However, a common shortfall among these is their inability to actively respond to price changes. Given the food market’s inherent fluctuations in customer demands and prices towards the supply chain’s end, Poolix aims to address this issue through digitalization, positioning it as a key competitive advantage.

Launched in September last year, Poolix quickly secured seed investment from Bluepoint Partners and started generating revenue by January this year. Having already secured 2,700 supply partners, it offers customized services tailored to the purchasing companies’ needs, focusing on supplier and product exposure. Poolix currently provides two main services: ‘Poolix Directory,’ which allows ingredient supply companies to freely register their information, and ‘Looking for Partners,’ helping buyers to find suitable suppliers. Additionally, Poolix is developing a ‘one-stop’ service enabling comprehensive solutions from website browsing to payment.

The domestic food B2B market is valued at 340 trillion won annually, with Poolix targeting the 140 trillion won market share held by small businesses. Currently, it earns revenue primarily through service provision and acting as a vendor, offering an efficient transaction process to both buyers and suppliers.

Lee Jin-gil, the founder of Poolix, is a Seoul National University graduate who earned a master’s degree from Columbia University in the USA before returning to South Korea to establish Poolix. The team, alongside CEO Lee, boasts global expertise across various fields, including finance, corporate strategy, sales, and marketing.

They plan to venture into the global market starting from 2025, with the domestic market serving as the initial testing ground. As Poolix has already achieved significant contracts and revenue just four months post-launch, it is poised to become a formidable platform in the food B2B sector.

What problem is Poolix aiming to solve?

In the domestic food B2B market, 98.5% of the 170,000 companies (70,000 in food manufacturing and 100,000 in food distribution) are small enterprises with fewer than 50 employees. These companies have traditionally conducted their business through limited personal networks and traditional sales activities.

Compared to the B2C market, which has seen convenience for consumers and new growth opportunities for sellers through digital transformation with platforms like Coupang and SmartStore, the B2B market, especially the food sector, has not undergone digital transformation.

This has led to larger companies further dominating the market through their extensive sales networks, while smaller companies face increasing difficulties. Poolix is focusing on this issue in the B2B market and aims to bring about a ‘digital transformation in the B2B market.’

How does Poolix propose to solve this problem?

There are platforms in the B2B market and in the food sector that have garnered a lot of attention. However, we believe that existing platforms overlook a very important attribute of the B2B market: ‘price exposure.’ The B2B market, involving backward industries such as raw materials, manufacturing, and processing, sees products and prices changing according to the purchasing company’s characteristics and requirements. Therefore, the limitations of existing services, where every buyer must purchase the same item at the same price, are inevitable.

Poolix aims to overcome the existing paradigm that digitization of the B2B market is impossible and create a platform that reflects the market’s characteristics.

What competitive edge does Poolix have over its competitors?

Poolix has secured a network with over 2,700 food companies. It’s rare for even established food companies, some over 10-20 years old, to have a list of over 1,000 partner companies, so we can quickly find and supply competitive items that our competitors may not easily find. Securing new and competitive items in the B2B market is crucial for the success of a business, and we pride ourselves on being able to significantly contribute to our client companies’ growth.

What products does Poolix offer?

We currently offer the ‘Poolix Directory’ and ‘Find a Poolix Partner’ services. ‘Poolix Directory’ allows any company to freely register information about themselves and their items to promote their business to buyers (purchasers).

Many small food manufacturing companies often don’t have a website or have outdated ones, so Poolix acts like a “company mini-homepage” that is easy to edit and can be used like a website through its unique link, which has received positive responses.

Conversely, purchasing companies can search for and quickly gather additional information about supply companies, making it widely used. ‘Find a Partner’ allows buyers to post about items they are looking for, and suppliers can propose their offerings. Supply companies can view 40-50 updates from buyers daily and send proposals if they find a good match, securing new sales opportunities.

This service is so well-received that even sales teams from large food corporations actively use it. We are now developing a B2B digital trading platform that will handle the entire process, from proposal to payment, within Poolix.

Ultimately, we aim to offer a ‘low-cost, high-efficiency’ B2B sales method for supply companies and provide demand companies with opportunities to source competitive items.

What is the market size that Poolix is targeting, and who are our core target customers?

Our target encompasses 170,000 companies (70,000 in food manufacturing and 100,000 in food distribution) active in the domestic food B2B market, generating annual sales of 340 trillion KRW. If we consider only small businesses with fewer than 50 employees, they account for 98% of the total number of companies but only 40% of the market size, amounting to a market of 130 trillion KRW. Our goal is to target this market and to assist these companies in conducting competitive sales activities and offering competitive items, similar to those of large corporations.

What is Poolix’s business model?

Currently, both the ‘Company Directory’ and ‘Find a Partner’ services are offered 100% free of charge. Anyone can create a profile for their company and send proposals in response to buyer requests at no cost.

In addition, many buyers approach us with supply inquiries in a non-public manner. We act as a vendor for these customers, supplying them with various items. Buyers can quickly find the items they want from Poolix’s extensive network of suppliers, and they find it convenient to communicate with just one Poolix manager, allowing them to focus on their business effortlessly.

What are the Poolix team’s achievements so far?

Since its establishment in September 2023, Poolix attracted seed investment from BluePoint Partners in October. Within three months, we secured a network with many food companies and generated our first sales in January 2024 by starting regular supplies of multiple food materials to a franchise headquarters.

Unlike general food distribution platforms where agricultural products or commercial goods are traded, the items we supply are mostly OEM/ODM or ‘strategic products’ intended for specific or a few customers. This allows Poolix to provide a stable supply based on a trust relationship over the long term.

What are the Poolix team’s competitive advantages?

We are a team with expertise and global capabilities in finance, strategy, sales, and marketing.

CEO Lee Jin-gil graduated from Seoul National University with a degree in Regional Information and completed a master’s in Real Estate Development at Columbia University in New York before returning to Korea to co-found Poolix with COO Yang Sang-jae. COO Yang Sang-jae, a Boston College economics graduate, has built expertise in corporate strategy through roles at Bain & Company and Invesco. Manager Lee Jae-woong, a junior from Seoul National University, has proven marketing capabilities in several startups.

Poolix prioritizes ‘trust’ as its core value. Our team is composed of individuals capable of fostering trust with customers, investors, and team members, which we believe is our strong competitive edge in the market.

Please provide three reasons why Poolix should receive investment.

First, we have confirmed Product-Market Fit (PMF). Since generating our first sales in January this year, we continue to see an influx of new customers.

Second, the market is large and scalable. The domestic food distribution market alone is worth 190 trillion KRW, and our service is designed to scale up using AI technology, capable of achieving a J-curve growth.

Third, we have global capabilities. With plans to enter the US market by 2025, Poolix is currently conducting preliminary business verification in South Korea. Both the founders and team members possess a global background, preparing us to expand into larger markets.

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2024-03-03

[…] [Korean Startup Interview] Poolix: Making New Paradigm in the B2B Food Market Through Digital Transf…Poolix, an ambitious Korean startup aiming to transform the B2B food market through digital transformation and dreaming of global market entry. […]

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