Before 2020, young people in Seoul faced a dilemma. They had jobs in the city, but the deposit for a studio apartment was a staggering 50 million won. Converting to monthly rent would easily cost over 1 million won. They felt bad about asking their parents for money, and taking out a loan would hurt their credit rating. Ultimately, they had no choice but to endure a two-hour commute or live in a basement apartment.
Landlords were also uneasy. Lowering the deposit increased the risk of default, while higher deposits prolonged vacancy. The vacancy rate for one-room apartments in Seoul hovered around 10%, and rental yields plummeted to the 3% range.
Amidst this structural contradiction, a startup emerged in 2020: KRG Group's "Guarantee." It offered a groundbreaking proposal: "You can get a home without a deposit."
Five years later, Guarantees has saved 60 billion won in deposits and brokered 35 billion won in monthly rental transactions. It is growing at an average of 30% monthly and achieved monthly break-even in the second half of this year. Its non-performing loan ratio stands at 0.6-0.8%, significantly below the industry average.
The commission is approximately 10% of the average monthly rent. It varies depending on the tenant screening results, but it comprehensively reflects lease risk and transaction stability. Operating expenses primarily consist of labor costs, raw data utilization costs, marketing expenses, and delinquency response costs.
"In particular, the sophistication of our review module is key to our business. We're putting a lot of effort into ensuring that '100 cases don't collapse due to one.' Maintaining a sound structure and maintaining market trust is more important than simply increasing contracts."
Bad debt rate from 1.5% to 0.6%, an achievement made by 7 people
The trend in the default rate is striking. Initially at 1.5%, it dropped to 1.0% and then to 0.6% after the internal collection system was improved and the review module was strengthened. This figure remains unchanged even as new contracts accumulate rapidly.
"Both based on the amount and number of claims, the ratio is around 0.6-0.8%. This is lower than the industry average. We have systematized the claim process and are maintaining a sound portfolio through data-driven, proactive risk management."
CEO Kim Jun-young is responsible for investment, service development, and partnerships, while co-CEO Kim Ki-seong leads sales organization management and field operations. The two have similar shareholding structures.
"Strategy and execution are perfectly aligned. Because we have clear roles and respect each other's expertise, we can make quick and rational decisions. This is our strength."
KRG Group currently operates with seven employees. It's a compact organization comprised of a review and development team, a financial strategy team, and a sales team. What's remarkable is that key indicators are more than five times higher than when the group was 25 people.
"Our efficient growth is thanks to the dedication and expertise of our current employees. Although we're a small organization, we maintain quick decision-making and high execution capabilities."
The "Guarantee Office" service, launched in September of this year, is generating a lot of buzz and inquiries. CEO Kim Jun-young is confident. "We've thoroughly verified our pre-launch screening system. We received a positive response when we first launched it for individual commercial business owners last year, and we've expanded it to include corporate businesses this year. Our algorithm, which comprehensively evaluates tenants' payment and repayment capabilities, is operating reliably."
In fact, the TIPS project selected for recommendation by Kyobo Life Insurance was the development of this algorithm. Development has been completed and is currently being implemented. CEO Kim Jun-young explains, "This technology comprehensively analyzes a business's actual sales activities and payment capacity to help ensure stable transactions."
Market share is still small, but CEO Kim Jun-young doesn't seem impatient.
"We're maintaining an average monthly growth rate of 30%. Rather than dominating the market in the short term, it's more important to focus on steady growth through stable service quality and building trust."
When asked what differentiates it from competing services, a clear answer came back.
"They are platforms focused on payment and information brokerage, while we are a service that effectively manages rental risks. Our structure simultaneously guarantees both landlord safety and tenant accessibility. We prioritize collaboration over competition. In fact, some of these companies are currently discussing collaboration."
The recent MOU signed with Korea Asset Purchase is also bearing fruit. "Contracts are being signed immediately on the spot. Both companies are experiencing synergy."
Series A funding is also underway. The secured funds will be invested in expanding operations, brand marketing, and enhancing the risk management system.
The very concept of a security deposit will fade.
When asked about sustainability, CEO Kim Jun-young thought for a moment and then answered.
"If this business were easy, large corporations would have jumped in long ago. It's a complex field with complex legal, financial, and operational risks. Despite five years of challenges, we've persevered through solving them, and now, with clear performance indicators, we're confident in our sustainability."
At the end of the interview, I asked about the rental market in 10 years. CEO Kim Jun-young answered firmly: "The very concept of a deposit will probably fade. Young people and small business owners are frustrated by the 50 million won deposit barrier. This structure is unsustainable. Ultimately, data-driven credit ratings and risk management systems will replace deposits."
We'll know for sure in five years whether he's right. What's clear is that the rental market has changed significantly since 2020. The option to secure homes and business space without a deposit has emerged, and those options are expanding, saving 60 billion won.
You must be logged in to post a comment.