South Korea found their third Unicorn Startup in Toss after Viva Republic when the company raised $80 million to establish a net worth of $1.2 billion. This round of funding was led by US-based investors Kleiner Perkins and Ribbit Capital, both of which made their first deals with Korea with this deal. Altos Ventures, Bessemer Venture Partners, Goodwater Capital, KTB Network, Novel, PayPal and Qualcomm Ventures were the others in the deal.
This deal came merely six months after Viva Republic raised $40 million to accelerate growth and makes Toss have only $200 million raised from investors. The rest of the $1 billion remains the company’s own privately held funding.
The application Toss was developed by a former dentist SG Lee who aimed to make online transactions in Korea more efficient and less cumbersome, motivated primarily by personal frustration with existing systems. Even though the country has one of the highest smartphone penetrations rates in the world and is a top user of credit cards, the process required more than a dozen steps and came 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 said in a past statement.
The application started with more traditional styles and formats of payments but proliferated into different sorts of payment methods and strategies to incorporate more efficient, easier means focused around financial products. Toss users can now access and manage credit, loans, insurance, investment and more from 25 financial service providers, including banks.
Fintech initiatives are much more collaborative and co-operative in Asian startups in contrast to the Western or European counterparts. As far as Toss is concerned, it essentially acts as a funnel to help traditional banks find and vet customers for services. Thus, Toss is graduating from a peer-to-peer payment service into a banking gateway.
“We want to help financial institutions to build on top of Toss… we’re kind of building an Amazon for the financial services industry,” said Lee. “We try to aggregate all those activities, covering saving accounts, loan products, insurance etc.”
He expressed his concerns about the competitions between Korea and the USA in terms of similar technologies used in Fintech. He stated in an interview, “Korea is a top 10 global economy, but no there’s no Mint or Credit Karma to help people save and spend money smartly. We saw the same deep problems we need to solve [as the U.S.] so we’re just digging in.”
Lee plans to partner up with other companies to offer more Fintech based products to the country of South Korea as well as the rest of the world.