Dentist-turned-entrepreneur takes Superapp Fintech launch to the next level
Viva Republica director Lee Seung-gun takes his financial super app Toss to its next stage with a big push in Southeast Asia and a blockbuster fundraising round in the works – and this is just the beginning .
This story is part of Forbes’ coverage of Korea’s Richest 2022. See the full list here.
IIt’s been seven years since Lee Seung-gun turbocharged South Korea’s mobile payments industry with its money transfer app Toss, which it later turned into a super financial services app. Now, the former dentist is seeking a share of the fast-growing Asian fintech market, paving the way for ambitious plans to go global. “We have banking, securities and all of that in one app, which gives [investors] more confidence that Toss could become the number one player in the entire fintech industry,” says Lee, founder and CEO of app operator Viva Republica, in a video interview from his office. of the upscale Gangnam district in Seoul.
To achieve this, Lee is preparing a new financing round at a valuation of more than $10 billion in the second quarter. “Already a lot of investors are trying to contact us,” he says. This potential increase is in addition to the $940 million in total funds received since 2014 from investors such as PayPal, Sequoia Capital China and Singapore’s sovereign wealth fund GIC. The crux came last June when Viva Republica raised $410 million at a valuation of $7.4 billion, making it South Korea’s most valuable startup, according to researcher CB Insights, and Lee , who turned 40 in January, is a billionaire. He debuted on this year’s Korea Rich List at No. 36 with a net worth of $1.2 billion.
Toss was an instant hit when Lee launched the app in 2015, making it easier for South Koreans to transfer money online. Now with 20 million downloads, its 11 million users regularly use its dashboard of options ranging from insurance plans to loans to online investing. To test the waters beyond Korea, Lee launched Toss in Vietnam two years ago, where its cash rewards and debit card services attracted three million monthly active users, then expanded the pushed to Indonesia, Malaysia, Philippines, Thailand and Singapore.
There’s no doubt that the market is large – Southeast Asia’s online lending segment alone saw $39 billion in transactions last year, according to a November report from Google, Temasek and Bain . But capturing the booming fintech market in the region is easier said than done. Southeast Asian tech giants like Singaporean billionaire Forrest Li’s Sea, Anthony Tan’s Grab and Indonesian GoTo are already engaged in a fierce battle to become the go-to local super app, including fintech services, and Viva Republica will have to fight to gain market share. Unicorn startups such as Xendit, backed by Tiger Global in Indonesia, and Nium in Singapore, backed by Singaporean public investment firms Temasek and GIC, also threw their hats into the ring.
To this end, partnerships will be essential. Viva Republica’s chief strategy officer, Seo Hyun-woo, said in a media interview earlier this year that the company will shift from an organic growth strategy to actively pursuing overseas investments and acquisitions. In Vietnam, the company has partnered with Malaysian CIMB Group, one of Southeast Asia’s largest lenders by assets. Late last year, he made his first overseas investment, buying a small stake in Republic, an American startup investment platform. “We’re not a company where we give the exact same product to the same nation,” Lee said in November. “We go into the market and try to learn about customer problems and how we can solve [them].”
For Viva Republica to have a chance of becoming one of the world’s top fintech companies, it must first become profitable, says Lee Sung-bok, a financial services industry researcher at the Korea Capital Market Institute. Its sales more than doubled to 820 billion won ($672 million) last year, while net losses widened to an undisclosed amount from 91 billion won in 2020 due to hiring. aggressive and cost-effective marketing, according to the company. Being profitable would also make it easier to go public, which Viva Republica envisions in the next three to five years.
“Toss focused on marketing to increase its customer base. But I think the marketing strategies adopted by Toss have mainly increased cherry pickers,” he says. “In an era of digital innovations, I believe outside money can be easy to attract but not cheap to keep when Toss’ business model becomes known as unsustainable.”
Lee has never been shy about taking on a challenge. “I was a dentist,” says Lee, who graduated from South Korea’s top dental school at Seoul National University. “I didn’t know anything about that.” After completing his mandatory military service in South Korea, the then 27-year-old met a dental school classmate for advice on setting up his own practice. But instead of walking away with a to-do list, Lee saw a new path. It wasn’t what his friend said, it was what he had: the new iPhone 3GS. “It was a mind-blowing experience,” says Lee. The successor to Apple’s 2008 iPhone 3G, whose revolutionary App Store changed the way people used smartphones, was twice as fast and recorded video. But what fascinated Lee were its 65,000 third-party apps. “The first thing that came to mind was, ‘I want to make an app,'” he recalls.
He made his digital ambitions a reality and hired a software engineer. Lee worked two days a week as a dentist at a Samsung-affiliated hospital to fund the company, and focused the rest of his time on developing an app, any app. “Even though it was [terrible] or didn’t make sense,” Lee says. There was a selfie app and an app that helped file online petitions – eight in total, but not all of them were successful in raising money.
Then Lee, frustrated with the difficulty of making an online payment in Korea, struck gold in 2015. Before the Toss, Koreans had to go through a 10-step process to transfer funds that involved entering multiple PINs and passwords. Lee’s three-step app resonated with smartphone users, and Toss signed up 600,000 customers in its first year. Korean financial giants raced to catch up with their own offerings, and mobile payments in the country quadrupled to $4.6 billion over the next two years. But her biggest challenge, Lee says, was getting her parents’ blessing to quit dentistry and become an entrepreneur. “It was the first time I faced them,” he said.
Han Kim, Korean-American co-founder and managing director of California-based Altos Ventures, recalls how inefficient mobile finance in South Korea used to be. “I went through screen page after screen page [just to transfer money]. I thought that was crazy,” says Kim, whose company has invested in some of South Korea’s most successful startups, including Bom Kim’s e-commerce giant Coupang and online game maker. Chang Byung-gyu’s line, Krafton (Kim is No. 14 on this year’s Korea Rich List with a net worth of $3.2 billion, while Chang is No. 25 with a net worth of $1.8 billion. dollars).
Lee’s tenacity in tackling South Korea’s archaic online money transfer system is what helped Toss succeed, Kim says. He helped open up the conservative financial services industry by convincing regulators of the benefits of change, such as convenience and efficiency. “At its foundation, fintech is a win-win business that creates strong value for consumers through its innovations,” Lee said at a 2015 industry meeting with regulators, government officials and then South Korean President Park Geun-hye.
Kim, who was the first investor to back Viva Republica, says what sets Lee apart is his openness to learning. “When he’s wrong, he admits he’s wrong, which is a rare trait in a lot of people,” Kim explains. Toss regularly releases new features to complement its existing services. At one point, it introduced three new features every week for six months, keeping the ones that worked and removing the ones that didn’t. “We want everyone to achieve something and be friendly in the face of failure,” Lee says of Viva Republica’s corporate culture. “When you fail, you redouble your efforts until you finally succeed.”