Viva Republica, the The Seoul-based fintech firm behind Toss, a super app with 40+ financial services, announced today that it has raised $ 410 million on a post-money valuation of $ 7.4 billion. The new financing was led by Alkeon Capital, an American investment firm, and included the involvement of new investors such as the Korea Development Bank and returning financiers Altos Ventures and Greyhound Capital.
The company plans to launch Toss Bank, a neobank, in September 2021, which it describes as the “final key component” of its super app strategy. It will also use the funding to continue its expansion in overseas markets, including Vietnam, where Toss launched last year.
Viva Republica, which achieved unicorn status in 2018, has now raised more than $ 940 million in equity.
Founder and CEO SG Lee told Biomedarticles that Toss Bank will be focused on lending and will also offer savings accounts with competitive interest rates.
“Many challenger banks and neo-banks focus on the banking experience like cards, so their main source of income is interbank fees,” he said. “Toss is very different because we already cover all of that. We cover P2P payments, money transfers, cards and all kinds of services. So we focus on loans, unsecured loans, mortgages, all types of loans. We will use this vehicle to provide the most competitive interest rates to users and Toss Bank will not have a separate app as we have a super app strategy. “
One of the reasons Toss Bank is focused on lending is because many South Korean banks only offer them sub-prime rate loans for someone with medium credit, Lee said. Toss Bank will be able to offer better tariffs as its risk assessment model leverages the data of its millions of users.
Toss now claims a total of 20 million users (or more than a third of South Korea’s 51.7 population), of which 11 million are monthly active users.
The app was launched in 2015 as a Venmo-like peer-to-peer money transfer platform before other services were added. Now, users can turn to the app for almost all of their financial needs.
For example, they can use a dashboard to check their balances with various banks and credit cards. Merchants can use Toss Payments to send and receive online payments and manage their business finances. Other features include budgeting tools, bill payments, a credit score tracker, and insurance plans. Lee said that more than 20% of bank accounts and credit cards in South Korea are already registered with Toss.
As a financial super-app, Toss Bank can supplement information from the most important credit rating agencies in South Korea with its own data on user transactions: for example, where they spend money, how often they spend, their cash flow and their balances.
Lee added that one of South Korea’s leading credit bureaus, KCB (Korea Credit Bureau), tested the Toss engine on data from over two million users and found it to be 150% better and better on differential performance analysis 30% less in default interest. “This is the first engine that counts this asset-related data, and the credit scoring did not use machine learning technologies,” he said in South Korea. “I think Toss Bank is really well positioned to disrupt the entire credit market.”
In March, Toss also launched an investment service called Toss Securities, which aims to make stock trading accessible to new investors who shy away from traditional brokerages. In the past three months, it has registered more than 3.5 million users.
Viva Republica launched Toss in Vietnam, its first international market, in 2020. The app now offers services such as free money transfers, debit cards and a financial dashboard through a partnership with CIMB Bank. Toss currently claims more than three million monthly active users in Vietnam and says it is adding more than 500,000 active users every month. Toss also plans to enter other Southeast Asian markets.
Toss hasn’t set a timetable yet, but it is targeting Malaysia for its next market by the end of this year. “The product we developed for Vietnam is pretty scalable in all Southeast Asian markets, so it’s a matter of when,” said Lee. “But we want to concentrate on the Vietnamese market because it is scaling faster and faster and we have to cover the growth.”
Regarding the possibility of an IPO or looking for another exit option, Lee said the company is still in the process of finalizing its plans. “As an Asian company, a valuation of $ 7.4 billion is pretty high and I think at some point we will no longer be able to raise more funds in the private market. So we’re aiming to raise over $ 300 million again by the end of this year or early next year. This will be our last private fundraising, and then we will think over a period of three years and check not only for a Korean but also a US listing. “