Meet the Korean apartment rental startup disrupting the hot housing market

As a founding member of WeWork Labs, the venture arm of the co-working space giant, Matthew Shampine helped transform the world of commercial real estate. Now he’s taking on the South Korean housing market with deposits, one rental at a time.

largeBeing in cramped, inaccessible apartments remains an unlikely reality for many adults. When Matthew Shampine, the Korean-American co-founder and CEO of apartment rental startup Dongnae, moved to Seoul with his wife and newborn daughter, he saw an opportunity to reshape this reality in South Korea.

“I really, really wanted to do something that would have the biggest impact on the most people,” Shampine, 39, says in a video interview. “You can ask anyone here, but Koreans have a strong affinity for residential real estate … we can change the whole experience, end to end, and cater to their needs.”

Born in South Korea, Shampine was adopted in the United States and raised in New Jersey. In 2007, he returned to Korea for a Korean-American adoptee conference and was reunited with his biological family. There, he made it a mission to return for good — and to do good for the country.

Shampine joined WeWork in 2011 and founded WeWork Labs, the office-sharing company’s startup incubator. In 2018, he became general manager of WeWork Korea, where he met Dongnae co-founder Insong Kim, who serves as the company’s chief strategy officer.

Together, the pair launched Seoul-based Dongnae in 2020, aiming to make moving into an apartment more affordable and accessible. Its core product, Dongnae FLEX, offers short-term, fully furnished rental properties with low deposits, appealing to new graduates or travelers who can’t stomach the exorbitant deposits — as much as 350 months’ rent, the startup says — that are typically required by Korea apartments.

“The way our product came about is that we really enable people to live in the apartments they want,” says Shampine. “We’re unlocking all these new options because you’re not limited by the amount of money you’ve set aside for a deposit.”

So far, Dongnae has opened its doors both local and international investors. The $21 million Series A funding round in March included NFX, which has supported similar Lyft and Doordash, and tech-focused MetaProp, its backer Airbnb, along with Korea’s oldest investment fund Daol Investment and Hana Financial. The fresh capital brought the startup’s total funding to about $34 million, following a $4.1 million seed round in December 2020 and a $700,000 pre-launch round last year. Dongnae declined to disclose its current valuation.

“Residential property is the largest asset class here in Korea,” Kyung Kuk-hyun, chief executive of Daol Investment, said in a statement about Dongnae’s latest funding. “Dongnae’s incredible growth coupled with their strong financial partnerships with leading financial institutions make this an exciting investment.”

More than 80% of Korean household wealth is in real estate, compared with about 35% in the United States, but home ownership has proven increasingly difficult. The average price of an apartment in Seoul, the country’s capital and most populous city, doubled between 2017 and 2021 to more than $1 million. Housing has been at the center of Korea’s latest presidential debate, with President-elect Yoon Suk-yeol pledging to cool the market and build 2.5 million new homes across the country during his five-year term.

Renting is not always an easier alternative. Korea’s rental housing market relies heavily on jeonse, a unique payment system that requires tenants to provide large down payments. Known as “key money,” these lump sums are up to 80 percent of a unit’s sales price — the average jeonse price for apartments in Seoul was about $516,000 in August, while some areas could fetch as much as $572,400, according to with details of KB Kookmin Bank.

The widespread practice of borrowing to release “key money” adds to Korea’s deepening household debt crisis, which topped 104 percent of Korea’s GDP in June. Among the nation’s top five lenders, jeonse debt reached $106.4 billion last June, up from $37.8 billion in the same month in 2017. More than half of the outstanding loans came from adults in their 20s and 30s , who owed $63 billion.

More Koreans are abandoning the high deposit rental system. Of the total 258,313 apartment and house rental transactions in April, 50.4% of them involved monthly rentals, not jeonse, according to Korea’s Ministry of Land, Infrastructure and Transport—the first month since 2011 that jeonse did not precede transactions.

Shampine links the shift away from jeonse to the evolving needs of young professionals, who are rethinking traditional ideals of marriage, parenting and home ownership. In addition to the “free” feeling of debt-free living, short-term rental properties provide these adults with the opportunity to explore more independent and flexible living arrangements while prioritizing their careers or friendships – an apartment’s school district is less important from proximity to work or location in a “cool neighborhood,” he says.

“For people in their late 20s and early 30s, the idea of ​​being independent from your parents is different than being independent in terms of not having a roommate,” says Shampine. “You can both work together and have a really amazing apartment. In the past, here in Korea, your options were either to live in a very small living space or an office building (a building with offices and residences) with no amenities at all.”

Dongnae started as a listing platform for potential tenants to book appointments with real estate agencies, but has seen limited success. Shampine says his team didn’t foresee “cultural dynamics” limiting demand for their product. “We realized here in Korea, it’s very easy to go to any apartment complex in the city or have a kind of connection with a realtor, to just ask for a tour whenever you want,” he said. “So the idea of ​​going through an app and booking [a tour] for example, this coming weekend, it just didn’t look that appealing.”

The initial lack of success raised “good and healthy,” if painful, concerns about the business model, Shampine says. Conversations with customers, brokers and on-site team members informed Dongnae’s goal of “making the commission, rather than chasing the commission.” In July last year, Dongnae switched from apartment listings to serviced apartments. At the end of its latest round of funding, the startup said its properties span 60 apartment complexes — now, they span 80, across 12 districts in Seoul.

Looking to the future, Dongnae plans to expand the home services it offers to residents, tapping into Korea’s booming market for furniture and lifestyle items. Other startups developing solutions for living spaces have seen significant success. In May, interior design platform oHouse raised $182 million to become the latest Korean unicorn, at a valuation of about $1.6 billion.

Shampine hopes to lead to a broader cultural change. “When I personally think about how WeWork has changed commercial real estate here, from renting space and co-working to real environments inside offices, I really hope that we’ll be able to do something similar from a residential perspective,” Shampine says. “Making the best experience… for realtors, for landlords and especially for renters.”

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