Toss operator becomes ‘unicorn’ after funding

Viva Republica, operator of the Toss money-transfer app, has become a so-called unicorn after the company’s latest round of funding pushed its valuation to over $1 billion.

It’s Korea’s first fintech unicorn.

On Dec. 10, the company announced the raising of $80 million from venture capital firms, including Kleiner Perkins and Ribbit Capital. Its post-money valuation is now $1.2 billion.

“Toss is making consumers’ financial lives safer and easier with its remarkable drive,” said Noah Knauf, a partner at Kleiner Perkins, on the investment.

“Taking into account the size of Korea’s financial market, we are certain of Toss’s huge potential in terms of growth and profitability,” added Nikolay Kostov, a partner at Ribbit Capital, which has invested in financial firms such as Coinbase.

Both Ribbit Capital and Kleiner Perkins, which has invested in Google and Amazon, are making their debut in the Korean market with Toss.

Toss is the country’s leading money transfer app. As of last month, it had 10 million accumulated users and 28 trillion won ($24.8 billion) in accumulated transfer volume.

Though Toss started off as just a peer-to-peer money transfer provider when it first launched February 2015, it now offers a vast array of financial services, including savings accounts, overseas stock investment and credit score management.

“I’m proud of our company’s performance, which we were able to achieve with fewer than 200 employees,” said CEO Lee Seung-gun, who founded Viva Republica in 2011 after a career as a dentist.

“We will focus on developing a service that can bring consumers the greatest satisfaction,” he said.

With Viva Republica’s new valuation, Korea is now home to a total of four unicorns. Coupang, which raised $2 billion from SoftBank’s Vision Fund just last month, is the largest. It is now valued at around $9 billion.

Yello Mobile, which runs the Pikicast media platform, and L&P Cosmetics, a skincare company known for its facial masks, are also valued at over 1 trillion won.

Unicorns are not a rare phenomenon outside Korea. China has 186 while the United States has 140. In those countries, it is the decacorns, or start-ups valued at over $10 billion, that are making headlines.

Around 15 start-ups worldwide have reached decacorn status, including Uber, Xiaomi and ByteDance, the Chinese operator behind the TikTok video app.

Experts believe more Korean start-ups could reach unicorn, or even decacorn, status if regulations were more flexible.

Mobility companies offering ridesharing and ride-hailing services like Uber, Lyft, Didi Chuxing and Grab make up a considerable portion of the world’s decacorns. But domestic laws make ride-hailing companies illegal in Korea, and companies that try to launch mobility services face massive protests from taxi unions.

Viva Republica also had to overcome challenges related to government regulation. After having its beta service for Toss shut down by financial regulators in 2014, Viva Republica was only able to launch the app again the following year. The troubles made it difficult for the start-up to secure funding from weary domestic investors.

“We keep losing the opportunity to grow our company and compete globally because of regulations,” said one start-up executive who requested anonymity.

BY HA SUN-YOUNG [kim.eunjin1@joongang.co.kr]