Viva Republica, the The Seoul-based fintech company behind Toss, a super app with more than 40 financial services, today announced it has raised $ 410 million for a post-money valuation of $ 7.4 billion. The new funding was led by Alkeon Capital, a U.S. investment firm, and included participation from new investors like the Korea Development Bank and backers Altos Ventures and Greyhound Capital.
The company plans to launch Toss Bank, a neobank, in September 2021, which it describes as “the last key piece” of its super app strategy. It will also use the funding to continue its expansion into 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 TechCrunch that Toss Bank will focus on lending and also offer savings accounts with competitive interest rates.
“A lot of challenger banks and neobanks focus on the banking experience, like cards, so their main source of income is interchange fees,” he said. “Toss is quite different because we already cover it all. We cover P2P payment, money transfer, cards and all kinds of services. So we focus on loans, unsecured loans, mortgages, all kinds of loans. We’re going to use this vehicle to offer the most competitive interest rates to users, and Toss Bank won’t have a separate app because we have a super app strategy.
One of the reasons Toss Bank focuses on lending is that if someone has an average credit rating, many South Korean banks will only offer loans at subprime interest rates, Lee said. . Toss Bank will be able to offer better rates because its risk scoring model leverages data from its millions of users.
Toss now claims a total of 20 million users (or more than a third of South Korea’s 51.7 people) and of that amount, 11 million are monthly active users.
The app was launched as a Venmo-like peer-to-peer money transfer platform in 2015, before adding more services. Now its users can turn to the app for almost all of their financial needs.
For example, they can check their balances with different banks and credit cards on a dashboard. Merchants can use Toss Payments to send and receive online payments and manage their business finances. Other features include budgeting tools, bill payments, credit score tracking, and insurance plans. Lee said more than 20% of South Korea’s bank accounts and credit cards are already registered with Toss.
As a financial super app, Toss Bank will be able to supplement information from South Korea’s major credit rating agencies with its own data on user transactions: for example, where do they spend money, how often they, their cash flows and their balances.
Lee added that one of South Korea’s major credit bureaus, KCB (Korea Credit Bureau), tested Toss’s engine with data from over two million users, and it turned out to be 150. % better in terms of differential power analysis and 30% lower in delinquency rate. “It’s the first engine that counts this asset-related data, and no machine learning technology has been used in credit scoring” in South Korea, he said. “I think Toss Bank is in a really good position to disrupt the whole lending market.”
In March, Toss also launched an investment service called Toss Securities, designed to make stock trading accessible to new investors who shy away from traditional brokerage houses. In the past three months, it has registered over 3.5 million users.
Viva Republica launched Toss in Vietnam, its first international market, in 2020, and the app now offers services such as free money transfers, debit cards and a financial dashboard through a partnership with the CIMB bank. Toss currently claims over three million monthly active users in Vietnam and says it adds more than 500,000 monthly active users. Toss also plans to enter other Southeast Asian markets.
Toss hasn’t finalized a timeline, but is targeting Malaysia for its next market by the end of this year. “The product that we built for Vietnam is actually quite scalable across all Southeast Asian markets, so it’s a matter of time,” Lee said. “But we want to focus on the Vietnamese market because it is moving faster and faster and we have to cover the growth.”
As for the possibility of making an initial public offering or finding another exit opportunity, Lee said the company is still finalizing its plans. “As an Asian company, reaching a valuation of $ 7.4 billion is pretty high, and I think at some point we will be faced with the inability to do more fundraising in the private market. . We therefore aim to raise once more by the end of this year or early next year for over $ 300 million. This will be our last private fundraiser, and then we think of a three-year timeline, and we look at not only a Korean list, but an American list as well.