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Korean neobank and app developer Viva Republica raises $410 million

Viva Republica, the Seoul-based fintech developer known for Toss, announced a $410 million investment which sets the company’s post-money valuation at $7.4 billion, according to TechCrunch.

The funding was led by Alkeon Capital and included participation from Korea Development Bank. Seed and Series A lead investor Altos Ventures and previous contributor Greyhound Capital also contributed to the funding.

Viva Republica CEO and founder SG Lee says the company plans to use the funding to further overseas market expansions and to launch Toss Bank, a neobank with focused on providing lending and savings accounts with competitive interest rates.

“We are focusing on loans, unsecured loans, mortgages, all sorts of loans. We are going to use this vehicle to give the most competitive interest rates to users, and Toss Bank will not have a separate app, since we have super app strategy,” Lee said in an interview with TechCrunch.

Viva Republica is known as the creator of Toss, a “super-app” offering over 40 financial services, which launched in South Korea in 2015 and has processed over $555 million in investments.

The company says that Toss Bank, which is set to launch on the app in September 2021, is the final major component of its overarching super app strategy. Lee stated that the company is aiming to have a final private fundraising of over $300 million at the end of this year or early next.

Lee says that the new tool will be able to supplement information from South Korea’s major credit rating agencies with its own user transaction data, with testing showing significant improvement in credit evaluation and loan performance.

“This is the first engine that counts this asset-related data, and no machine-learning technologies have been used in credit evaluation” he told TechCrunch, adding, “I think Toss Bank is really well-positioned to disrupt the whole loan market.”

While the app originally only offered peer-to-peer money transfer, it has continued to add services including online payments, business finance management, budgeting tools, credit score tracking and insurance plans.

The company has now raised over $940 million in equity funding, and claims to be used by more than a third of South Korea’s population (20 million of 51.7 million) after hitting unicorn status in 2018.

Viva Republica’s valuation has more than doubled in the past year, joining a list of only 10 finance-focused startups world-wide that are worth over $7 billion according to CB Insights.

South Korean technology companies have started to gain attention from global venture capital firms, with Lee telling the Wall Street Journal that dense urban areas and widespread smartphone usage are beginning to overcome investor doubts about the countries’ comparatively small market.

“They find the growth is unparalleled in terms of user base and revenue,” he said an interview with the WSJ, adding “In terms of the opportunity and market size, it’s massive.”

Toss expanded to its first overseas market, Vietnam, in 2020 and says it has plans to target Malaysia’s market by the end of 2021 following its adoption by over 3,000,000 active monthly users in Vietnam.

The company is currently reviewing public listings in both Korea and the US and expects to have a concrete plan to start the IPO process within the next three years, according to Reuters.

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