Viva Republica, the Seoul-based fintech firm behind Toss, a brilliant app with greater than 40 monetary providers, introduced at the moment it has raised $410 million at a post-money valuation of $7.4 billion. The brand new funding was led by Alkeon Capital, an American funding agency, and included participation from new buyers like Korea Growth Financial institution, and returning backers Altos Ventures and Greyhound Capital.
The corporate plans to launch Toss Financial institution, a neobank, in September 2023, which it describes as “the ultimate key part” of its tremendous app technique. It is going to additionally use the funding to proceed its enlargement in abroad markets, together with Vietnam, the place Toss launched final 12 months.
Viva Republica, which hit unicorn standing in 2018, has now raised greater than $940 million in fairness funding.
Founder and chief govt officer SG Lee informed TechCrunch that Toss Financial institution will give attention to lending, and in addition supply financial savings accounts with aggressive rates of interest.
“Loads of challenger banks and neobanks are specializing in the banking expertise, equivalent to playing cards, so their predominant income supply is interchange charges,” he stated. “Toss is sort of totally different as a result of we already cowl all that. We cowl P2P cost, cash switch, playing cards and all kinds of providers. So we’re specializing in loans, unsecured loans, mortgages, all kinds of loans. We’re going to use this car to present essentially the most aggressive rates of interest to customers, and Toss Financial institution is not going to have a separate app, since we’ve got tremendous app technique.”
Toss founder SG Lee
One of many causes Toss Financial institution is specializing in loans is as a result of if somebody has a middling credit score rating, many South Korean banks will solely supply them loans at subprime rates of interest, Lee stated. Toss Financial institution will have the ability to supply higher charges as a result of its risk-scoring mannequin leverages information from its tens of millions of customers.
Toss now claims a complete of 20 million customers (or greater than a 3rd of South Korea’s 51.7 inhabitants) and of that quantity, 11 million are month-to-month lively customers.
The app launched as a Venmo-like peer-to-peer cash switch platform in 2015, earlier than including extra providers. Now its customers can flip to the app for nearly all of their monetary wants.
For instance, they will verify their balances at totally different banks and bank cards on a dashboard. Retailers can use Toss Funds to ship and obtain on-line funds and handle their enterprise funds. Different options embrace budgeting instruments, invoice funds, a credit score rating tracker and insurance policy. Lee stated greater than 20% of financial institution accounts and bank cards in South Korea are already registered on Toss.
As a monetary tremendous app, Toss Financial institution will have the ability to complement data from South Korea’s predominant credit standing businesses with its personal information about consumer transactions: for instance, the place do they spend cash, how typically do they spend, their money move and balances.
Lee added that one in every of South Korea’s main credit score bureaus, KCB (Korea Credit score Bureau), backtested Toss’ engine with information from over two million customers, and it turned out to be 150% higher by way of differential energy evaluation and 30% decrease in delinquency charges. “That is the primary engine that counts this asset-related information, and no machine-learning applied sciences have been utilized in credit score analysis” in South Korea, he stated. “I feel Toss Financial institution is actually well-positioned to disrupt the entire mortgage market.”
In March, Toss additionally launched an funding service known as Toss Securities, designed to make inventory buying and selling accessible to new buyers who draw back from conventional brokerages. Over the previous three months, it has signed up greater than 3.5 million customers.
Viva Republica launched Toss in Vietnam, its first worldwide market, in 2020, and the app now has providers like no-fee cash transfers, debit playing cards and a monetary dashboard by way of a partnership with CIMB financial institution. Toss presently claims greater than three million month-to-month lively customers in Vietnam and says it provides greater than 500,000 lively customers each month. Toss is planning to enter different Southeast Asian markets, too.
Toss hasn’t finalized a timeline, however it’s focusing on Malaysia for its subsequent market by the tip of this 12 months. “The product that we constructed for Vietnam is definitely fairly scalable throughout all Southeast Asia markets, so it’s a matter of time,” Lee stated. “However we wish to give attention to the Vietnam market as a result of it’s scaling more and more quick and we’ve got to cowl the expansion.”
As for the potential for holding an preliminary public providing or discovering one other exit alternative, Lee stated the corporate continues to be finalizing its plans. “As an Asian firm, reaching a $7.4 billion valuation is fairly excessive, and I feel sooner or later we are going to face not having the ability to do extra fundraising within the personal market. So we’re focusing on to boost as soon as extra by the tip of this 12 months or early subsequent 12 months for over $300 million. That might be our final personal fundraising, after which we’re considering a timeline of three years, and we’re reviewing not just for a Korean itemizing but in addition a U.S. itemizing.”
