Viva Republic, the company behind Korean financial services app Toss, has closed a $48 million Series C funding round which includes a strategic investment..<\/b>
Viva Republic, the company behind Korean financial services app Toss , has closed a $48 million Series C funding round which includes a strategic investment from payment giant PayPal.
The deal is PayPal\u2019s second investment this year \u2014 coming just days after it backed health startup Virta \u2014 but the round was led by San Mateo-based VC firm Goodwater Capital, which led Viva Republica\u2019s Series B round and counts Korean tech giants Kakao (messaging) and Coupang (e-commerce) among its portfolio. Bessemer Venture Partners, Altos Ventures and Partech Ventures also participated in the round.
The deal takes Viva Republic to $76 million raised to date. The company didn\u2019t provide a post-money valuation, but Goodwater Capital partner Eric Kim said there\u2019s \u201ca clear path to it becoming one of Asia\u2019s most significant fintech unicorns.\u201d
Viva Republica is known for Toss, a financial services platform that started out tackling Korea\u2019s archaic payment system. The pain of cumbersome online payment processes is what drove former dentist SG Lee to start the business two years ago, and today Toss has processed more than USD $3 billion in transactions from a base of 6 million registered users.
\u201cBefore Toss, users required five passwords and around 37 clicks to transfer $10. With Toss users need just 1 password and three steps to transfer up to KRW 500,000 ($430),\u201d Lee said in a statement.
Over the course of its founding, Toss has gone beyond peer-to-peer transfers and branched into consumer financing. Inspired by the likes of Kredit Karma and Mint.com in the U. S., it launched a financial dashboard, credit scoring and micro-loans (with one-minute decisions) in a bid to make financial services \u201cas frictionless as possible\u201d in Korea.
Lee has his sights on extending the business further still. This year, he told TechCrunch, Toss will introduce a loan marketplace to provide further credit options, micro-insurance, and TransferWise-style cross-border money transfers. That\u2019s where a large chunk of this new funding will go to, as well as helping increase awareness of the Toss service from its current crowd of tech-savvy youngsters to the older demographics in Korea.
\u201cToss is on track to serve 50 percent of Korea\u2019s millennials by the end of this year and have a solid product road map to launch services for all user groups as well,\u201d Goodwater Capital\u2019s Kim said in a statement.
While Korea has a tendency to be overlooked in Asia \u2014 China\u2019s vast population and the emerging potential of India and Southeast Asia catch the eye of tech firms \u2014 Lee said he believes it has all the ingredients for a financial tech revolution.
For one thing, it has the world\u2019s highest smartphone ownership rate while some 80 percent of consumer spending is via cards. Kim added that credit and debit card holders in Korea average nearly double the number of monthly transactions compared to the U. S.. Yes, Korea\u2019s population is just 50 million people, but it is the world\u2019s eleventh largest economy.
\u201cThe market is huge and ready to embrace really great financial service but nobody is pushing forward for it,\u201d Lee said.
One company that is also making moves in finance is Kakao, the country\u2019s dominant chat app that claims to be installed on 95 percent-plus of all smartphones in Korea. Kakao, which paired with rival Daum in a multi-million dollar merger in 2015 , launched a consumer payment service last year, but it has enlisted specialist help to broaden its focus. Ant Financial, the Alibaba affiliate that manages its Alipay service, China\u2019s dominant mobile payment system, led a $200 million invest in its Kakao Pay division last month. Tencent, another gargantuan Chinese tech firm, is also a founding investor.
Kakao may have a consumer audience and two vastly experienced investors, but Lee said he doesn\u2019t fear the threat.
\u201cThere might be competition in the future but right now we think it\u2019s quite different,\u201d he explained. \u201cWhat they\u2019re doing is more a b2b play, they want to be a basic payment system in Korea, and are acquiring merchants.\u201d
Toss, meanwhile, has gone down the consumer finance route. Rather than ripping it all out and starting again, Toss works with the existing financial system. The service counts 18 of Korea\u2019s 19 major banks as partners for facilitating payment and offer various other banking services.
The startup has plenty planned for this year, but outside of Korea Lee did admit that it will make a decision on international expansion before 2017 is out. Initially, his focus appears to be on Southeast Asia, where he sees parallels with the state of fintech in Korea from a couple of years ago, and that could be where the relationship with PayPal could come into play.
\u201cWe can learn a lot,\u201d Lee said. \u201cTheir past history is quite similar to where we are now. When we have critical mass in Korea then we will consider how to attack global markets.\u201d
In the more immediate term, he said, Toss is working to integrate its payments system with that of PayPal and Venmo to make transfers between them possible.<\/p>\n