Karrot, South Korea's leading local community platform, has loaded a massive war chest into its Canadian subsidiary that recorded tens of billions of won in losses. Industry observers say the move prioritizes securing a foothold in overseas markets over near-term profitability. Domestically, the company is strengthening a "two-track strategy" by shifting toward an artificial intelligence-based brokerage model to break away from its advertising-heavy revenue structure, analysts say.
Karrot injected 20.2 billion won ($14.2 million) in cash into its subsidiary Karrot Canada Corp. in January this year, according to industry sources on Saturday. The additional investment came despite the Canadian unit posting a net loss of 37.5 billion won last year. Notably, Karrot recorded its first consolidated profit in 2024 and expanded operating profit to 14.6 billion won in 2025, meaning the company reinvested its earnings directly into overseas expansion rather than building reserves.
The move reflects the nature of secondhand trading platforms, where transactions become active and business expansion becomes viable only after the user base surpasses a certain threshold. The company appears to have determined that broadening its service base is more important even at the cost of initial losses.
Karrot operates its secondhand trading platform in North America and Japan through its Canadian and Japanese subsidiaries. The Canadian unit started in Toronto and expanded to all of Canada in July last year. Through the Canadian subsidiary, Karrot also extended its operations to U.S. cities including New York and Chicago. In Japan, the company runs its secondhand trading platform in areas such as Tokyo and Yokohama through Karrot Japan Corp.
Karrot continues to pour funds into overseas operations because it sees far greater growth potential in foreign markets, where additional new users can be acquired. The domestic business faces difficulty in further top-line expansion, with advertising revenue accounting for 99% of total sales. Of Karrot's 270.6 billion won in revenue last year, advertising revenue reached 268.4 billion won.
On the domestic front, the company is seeking to diversify its revenue structure by upgrading its brokerage platform using AI. The plan involves strengthening platform efficiency and diversifying revenue away from the ad-centric model through R&D in areas including a model that predicts secondhand sale probability using AI, search quality improvement, an AI-powered anomaly detection system, and retrieval-augmented generation technology.
Karrot's R&D spending has steadily increased: 37.5 billion won in 2023, 47.2 billion won in 2024, and 55.2 billion won in 2025. R&D expenditure accounted for 20.4% of revenue last year. Karrot also injected 15 billion won and 300 million won in cash into Karrot Pay and Karrot Services (a telemarketing services unit), respectively, last month.
"The global market is currently in a phase of aggressive investment to expand the service base," a Karrot official said. "As we are in a growth stage where initial investment is concentrated, we are investing for mid- to long-term global business expansion rather than pursuing immediate profits." The official added, "Domestically, we are also strengthening internal services based on technological capabilities such as AI. We are upgrading our business to enhance user experience across diverse service areas, not just advertising."
