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In 2025, startups Balaan, Jeongyookgak, and Watcha sent shockwaves through the market by filing for corporate rehabilitation in rapid succession. These companies succeeded in achieving superficial growth. However, as their size increased, the scale of their losses also snowballed. In the end, Jeongyookgak collapsed under a high-cost structure, Watcha failed to overcome a lack of IP competitiveness, and Balaan fell apart after reaching the limits of bubble-driven growth. Their failures reveal a structural problem in Korean startups that have relied on investment while focusing only on growth metrics and narratives, neglecting basic economic principles and profitability verification. The lesson from the failure of these three companies is that startups must remain faithful to fundamentals. A company’s survival depends on the “essence of business,” namely cash flow and profit generation.

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In the summer of 2025, a series of shockwaves swept through the Korean startup ecosystem. From Balaan in March to Jeongyookgak in July and Watcha in August, companies that were once called “pre-unicorns” and had attracted tens of billions of KRW in investment entered corporate rehabilitation procedures one after another within just a few months. The ironic point is that all of them succeeded in outward “scale up.” However, as their size increased, the scale of their losses also snowballed. It was like a car with broken brakes speeding ahead with the accelerator pressed down, only to crash in the end. Their downfall is not simply the result of an economic slowdown or bad luck. Rather, it is closer to a “foretold disaster” that starkly exposes the structural flaws of the Korean startup ecosystem. Let us take a close look at the cases of Jeongyookgak, Watcha, and Balaan, which sounded the alarm for the startup ecosystem in 2025, and calmly examine the implications left by their growth and setbacks.


1. Jeongyookgak: The storytelling was perfect, but


“Delivery within 24 hours after slaughter.” This intuitive concept was enough to attract the attention of many investors. The story of a KAIST-trained math prodigy who was moved by the taste of Jeju pork and gave up studying in the United States to start a business added authenticity to the brand. Following recognition such as being named to Forbes 30 Under 30 Asia and being selected as a preliminary unicorn by the Ministry of SMEs and Startups. In 2022, the company acquired Choroc Maeul, a 24-year-old conglomerate affiliate, for 90 billion KRW as a startup in its sixth year, earning praise that “a shrimp swallowed a whale.” However, behind the attractive growth story, profitability was deteriorating with each passing day. As of 2021, the cost of goods sold ratio for product sales reached 114 percent. Quite literally, the more it sold, the more it lost. As sales increased, the scale of losses grew as well, and the company failed to achieve profitability even once since its founding. What was the reason?

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