South Korea has bought its third unicorn startup after Viva Republica, the corporate past common cost app Toss, introduced it has raised an $80 million spherical at a valuation of $1.2 billion.
This new spherical is led by U.S. companies Kleiner Perkins and Ribbit Capital, each of which minimize their first checks for Korea with this deal. Others taking part embody current buyers Altos Ventures, Bessemer Venture Partners, Goodwater Capital, KTB Network, Novel, PayPal and Qualcomm Ventures. The deal comes simply six months after Viva Republica raised $40 million to speed up development, and it takes the corporate to almost $200 million raised from buyers thus far.
Toss was began in 2013 by former dentist SG Lee who grew annoyed by the cumbersome approach on-line funds labored in Korea. Despite the truth that the nation has one of many highest smartphone penetrations charges on this planet and is a high person of bank cards, the method required greater than a dozen steps and got here with limits.
“Before Toss, users required five passwords and around 37 clicks to transfer $10. With Toss users need just one password and three steps to transfer up to KRW 500,000 ($430),” Lee mentioned in a previous assertion.
Working with conventional finance
Today, Viva Republica claims to have 10 million registered customers for Toss — that’s 20 p.c of Korea’s 50 million inhabitants — whereas it says that it’s “on track” to achieve a $18 billion run-rate for transactions in 2018.
The app started as Venmo -style funds, however in recent times it has added extra superior options targeted round monetary merchandise. Toss customers can now entry and handle credit score, loans, insurance coverage, funding and extra from 25 monetary service suppliers, together with banks.
Fintech startups are ‘rip it out and start again’ within the West –reminiscent of Europe’s challenger banks — however, in Asia, the strategy is extra collaborative and assistive. A numbe of startups have discovered a candy spot in between banks and shoppers, serving to to match the 2 selectively and intelligently. In Toss’s case, primarily it acts as a funnel to assist conventional banks discover and vet clients for providers. Thus, Toss is graduating from a peer-to-peer cost service right into a banking gateway.
“Korea is a top 10 global economy, but no there’s no Mint or Credit Karma to help people save and spend money smartly,” Lee informed TechSwitch in an interview. “We saw the same deep problems we need to solve [as the U.S.] so we’re just digging in.”
“We want to help financial institutions to build on top of Toss… we’re kind of building an Amazon for the financial services industry,” he added. “We try to aggregate all those activities, covering saving accounts, loan products, insurance etc.”
Former dentist SG Lee began Toss in 2013.
Lee mentioned the plan for the brand new cash is to go deeper in Korea by advancing the tech past Toss, including extra customers and — on the availability facet — partnering with extra corporations to supply monetary merchandise.
There’s loads of competitors. Startups like IndividualsFund focus squarely on monetary merchandise, whereas Kakao, Korea’s largest messaging platform, has a devoted fintech division — KakaoPay — which rivals Toss on each cost and monetary providers. It additionally counts the mighty Alibaba in its nook courtesy of a $200 million funding from its Ant Financial affiliate.
Alibaba and Tencent have a tendency to maneuver in pairs as opposites, with one naturally gravitating to the rivals of the opposite’s investees as just lately occurred within the Philippines. It’s difficult in Korea, although. Tencent is caught in limbo since it’s a long-standing Kakao backer. But may the Ant Financial deal spur Tencent into working with Toss?
Lee mentioned his firm has a “good relationship” with Tencent, together with the occasional dwelling/away visits, however there’s nothing extra to it proper now. That’s intriguing.
Overseas growth plans
Also of curiosity is future plans for the enterprise now that it’s taking over considerably extra capital from buyers who, even with essentially the most affected person cash on the market, finally want a return on their funding.
Lee is adamant that he received’t promote, regardless of Viva Republica more and more wanting like a perfect entry level for a cost or finance firm that has missed the Korean market and desires in now.
He mentioned that there are plans to do an IPO “at some point,” however a extra speedy focus is the chance to develop abroad.
When Toss raised a PayPal-led $48 million Series C 18 months in the past, Lee informed TechSwitch that he was starting to solid his eyes on alternatives in Southeast Asia, the area of over 650 million shoppers, and that’s prone to see definitive motion subsequent yr. The Viva Republica CEO mentioned that Vietnam might be a primary abroad launchpad for Toss.
“We’re thinking seriously about going beyond Korea because sooner or later we will hire saturation point,” Lee mentioned. “We suppose Vietnam is kind of promising. We’ve talked to potential companions and are at present articulating concepts and technique materialized subsequent yr.
“We already have a very successful playbook, we know how to scale among users,” Lee added.
While the plan continues to be being put collectively, Lee recommended that Viva Republica would take its time increasing throughout Southeast Asia, the place six distinct nations account for almost all of the area’s inhabitants. So, quite than quickly increasing Toss throughout these markets, he indicated extra deliberate, country-by-country launch might be the technique with Vietnam kicking issues off in 2019.
The Toss workforce at HQ in Seoul, Korea
Korea rising
Toss’s entry into the unicorn membership — a vaunted assortment of personal tech corporations valued at $1 billion or extra — comes weeks after Coupang, Korea’s high e-commerce firm, raised $2 billion at a valuation of $9 billion.
While that Coupang spherical got here from the SoftBank Vision Fund — a supply of capital that’s threatening to change into tainted given its hyperlinks to the homicide of journalist Jamal Khashoggi — it does symbolize the primary time Korea-based firm has joined the $100 billion mega-fund’s portfolio.
Some milestones may be dismissed as frivolous, however these two coming so shut collectively are a sign of elevated consciousness of the potential of Korea as a startup vacation spot by buyers exterior of the nation.
While Lee admitted that the unicorn valuation “doesn’t change a lot” in each day phrases for his enterprise, he did admit that he has seen the panorama shift for Korea’s startup ecosystem — which has solely two different privately-held unicorns: Coupang and Yello Mobile.
“More and more global VCs are aware that South Korea is a really good opportunity to do a startup. It is getting easier for our fellow entrepreneurs to pitch and get access to global funds,” he mentioned, including that Korea’s high 25 cities have a cumulative inhabitants (25 million) that matches America’s high 25.
Despite that potential, Korea has tended to concentrate on its ‘chaebol’ giants like Samsung — which accounts for a double-digital share of the nationwide financial system — LG, Hyundai and SK. That means a variety of potential startup expertise, each founders and workers, is locked up in safe company jobs. Throw within the conservative custom of household expectations, which might make it onerous for kids to justify leaving the protection of a giant firm, and it’s maybe no surprise that Korea has comparatively fewer startups in comparison with different economies of comparable dimension.
But that’s altering.
Coupang has been one of many highest profile examples to observe, alongside the (now public) Kakao enterprise. But with Viva Republica, Toss and a charismatic dentist-turned-founder, one other startup story is being written and that would simply encourage a future era of entrepreneurs to stand up and be counted in South Korea.
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