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Serial fiction app Radish acquired by Kakao Entertainment for $440M
Serialized fiction app Radish has been acquired by Kakao Entertainment in a transaction valued at $440 million. Kakao Entertainment is owned by Kakao, the South Korean internet giant whose services include its eponymous messaging platform. Radish founder Seungyoon Lee will hold onto his role as its chief executive officer, while also becoming Kakao Entertainment’s global strategy officer to lead its growth in international markets.
Radish claims millions of users in North America, and the acquisition will be help Kakao Entertainment expand its own webtoons and web novel business there, and in other English-speaking markets. Radish will retain management autonomy and continue operating as its own brand.
Founded in 2015, Radish originally focused on user-generated content, but now the core of its business is Radish Originals, or serial fiction series designed specifically for the app. The company said the launch of Radish Originals in 2018 helped propel its growth, with revenue increasing more than 10 times in 2020 from the previous year.
Radish monetizes content through its micropayments system, which allows users to read several free episodes before making payments of about 20 to 30 cents to unlock new episodes (users also have the option of waiting an hour to unlock episodes for free). About 90% of its revenue now comes from Radish Originals.
The acquisition means that Radish Originals’ intellectual property will now be adapted by Kakao into webtoons, videos and other content, increasing their reach. Since 2016, Kakao Entertainment has adapted several web novels including “What’s Wrong with Secretary Kim?,” “A Business Proposal” and “Solo Leveling” into webtoons and other media.
Lee told TechCrunch that Radish started exclusively distributing several of Kakao Entertainment’s most popular original series, like “What’s Wrong with Secretary Kim?” last month. It plans to launch more content from Kakao Entertainment’s portfolio and are also “looking at ways in which we can make original localized novel adaptions of Kakao’s popular stories,” he added.
In a press statement, Kakao Entertainment CEO Jinsoo Lee said, “Radish has firmly established itself as a leading web novel platform and yet we see even greater growth potential… With the combination of Kakao’s expertise in the IP business and Radish’s strong North American foothold, we are excited about what we can achieve together.”
The acquisition has been approved by Radish’s board of directors, which includes a representative from SoftBank Ventures Asia, its largest investor, and the majority of its shareholders. Radish’s other backers include Lowercase Capital, K50 Ventures, Nicolas Bergruen, Charlie Songhurst, Duncan Clark and Amy Tan, the best-selling author.
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Serialized fiction startup Radish raises $63.2M from SoftBank and Kakao
Radish is announcing that it has raised $63.2 million in new funding.
Breaking up book-length stories into smaller chapters that are released over days or weeks is an idea that was popularized in the 19th century, and startups have been trying to revive it for at least the past decade. Still, this round represents a major step up in funding, not just for Radish (which only raised around $5 million previously), but also compared to other startups in a relatively nascent market. (Digital fiction startup Wattpad is the notable exception.)
When I first wrote about Radish at the beginning of 2017, the startup was focused on user-generated content. Last year, however, the company launched the Radish Originals program, where Radish is able to produce more content using teams of writers lead by a “showrunner,” and where the startup owns the resulting intellectual property.
“Instead of becoming YouTube or Wattpad for serial fiction, we want to be more like Netflix and create our own originals,” founder and CEO Seungyoon Lee told me. “I got a lot of inspiration from platforms in Korea, China and Japan, where serial fiction is huge and established on mobile.”
One of the ideas Radish took from the Asian markets is rapidly updating its stories. For example, its most popular title, “Torn Between Alphas” (a romance story with werewolves) has released 10 seasons in less than a year, with each season consisting of more than 50 chapters — later seasons have more than 100 chapters — that are released multiple times a day.
“On Netflix, you can binge-watch three seasons of a show at once,” Lee said. “On Radish, you can binge-read a thousand episodes.”
While Radish borrowed the writing room model from TV — and hired Emmy-winning TV writers, particularly those with a background in soap operas — Lee said it’s also taken inspiration from gaming. For one thing, it relies on micro-payments to make money, with users buying coins that allow them to unlock later chapters of a story (chapters usually cost 20 or 30 cents, and more chapters get moved out from behind the paywall over time). In addition, the company can allow reader taste to determine the direction of stories by A/B testing different versions of the same chapter.
Lee pointed to the fall of 2019 as Radish’s “inflection point,” where the model really started to work. Now, the company says its most popular story has made more than $4 million and has received more than 50 million “reads.” Radish stories are mostly in the genres of romance, paranormal/sci-fi, LGBTQ, young adult, horror, mystery and thriller, and Lee said the audience is largely female and based in the United States.
By raising a big round led by SoftBank Ventures Asia (the early-stage investment arm of troubled SoftBank Group) and Kakao Pages (which publishes webtoons, web novels and more, and is part of Korean internet giant Kakao), Lee said he can take advantage of their expertise in the Asian market to grow Radish’s audience in the U.S. That will mean accelerating content production in the hopes of creating more hit titles, and also spending more on performance marketing.
“With its own fast-paced original content production, Radish is best positioned to become a leading player in the global online fiction market,” said SoftBank Ventures Asia CEO JP Lee in a statement. “Radish has proven that its serialized novel platform can change the way people consume online content, and we are excited to support the company’s continued disruption in the mobile fiction space. Leveraging our global SoftBank ecosystem, we hope to support and accelerate Radish’s expansion across different regions worldwide.”
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