Viva Republica, one of South Korea’s most valuable fintech start-ups, is planning to raise up to $1bn from international investors in the second quarter to fund the expansion of its super app Toss and take on SoftBank-backed competitors Grab and GoTo in south-east Asia.
The start-up, backed by Singapore’s GIC, PayPal and Sequoia Capital China, raised $410mn in June at a valuation of $7.4bn and is seeking another round of funding before launching an initial public offering. The company has raised more than $940mn in equity funding to date.
After venturing into Vietnam in 2019, where it has attracted 3mn active users with money transfer and debit card services, the company is now pushing into five other countries — Indonesia, Malaysia, Thailand, the Philippines and India — where it will go head to head with Singapore’s Grab and Indonesia’s GoTo, two of the biggest technology companies in the region.
“We’ve never thought of ourselves as a Korean market player,” the company’s founder and chief executive Lee Seung-gun said in an interview. “Our strategy of rebundling as a super app is very interesting to our investors.”
South Korea’s fintech market is expanding as a result of deregulation in the sector and a growing number of tech-savvy young consumers. Toss has 1.1mn monthly active users in South Korea, according to Lee.
Viva Republica’s sales more than doubled last year to Won880bn ($721mn), with its super app Toss generating revenue from a suite of financial services including online banking, stock trading, and insurance.
“Every fintech company in global [markets] always wishes to be a bundling [provider] of all features,” said Lee, a 40-year-old former dentist. “We have a really successful playbook that we achieved in South Korea and we are trying to mimic that success in that region.”
In Vietnam, Toss is adding more than 500,000 active users every month to gain ground on local rival MoMo, which boasts about 78mn registered users. Toss is offering credit card services and short-term loans in partnership with regional banks.
South Korean financial companies have struggled to crack into overseas markets despite burning significant amounts of cash. Domestic rivals Naver and Kakao Bank are also battling to make inroads into south-east Asia but Lee stressed that his company is taking a targeted approach, focusing on credit analysis and deep research on consumer behaviours.
“We are not going to be pouring tons of tons of dollars to become number one. We are trying to study customers’ pain points and trying to resolve that as great as possible,” said Lee.
But analysts say Toss’s push into south-east Asia is likely to be an uphill battle, given the presence of strong local players and Grab and GoTo, which have built a robust fintech ecosystem on the back of strong ride-hailing data.
“They have a chance at cracking those markets if they find proper local financial partners,” said Lee Sung-bok, a researcher at Korea Capital Market Institute. “But there are already established local players there so it won’t be easy for Toss to come up with a fresh service to beat them.”
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Source: Financial Times