A South Korean Startup Tosses Its Hat Into The Super-App Ring

Another super app competitor is stepping into the increasingly crowded Asian market as South Korea’s largest FinTech startup, Toss, has announced it has raised roughly $400 million, bringing the firm’s total valuation to $7.4 billion. The Seoul-based, Viva Republica-owned startup is now setting its sights on expansion as it looks to both build out its array of offerings and expand its footprint in Asia — all on the path to a potential public offering in 2025.

Toss’s aim in the market, according to reports, is to offer consumers a one-stop financial services super app providing consumers access to insurance, payments, credit scoring, securities trending, and, as of September, lending services. The lending add-on comes after Toss received South Korea’s third internet banking license earlier this month. With that addition, among others, Toss aims to double its monthly user base to 20 million and grow its annual revenue to $5 trillion by 2025, up for the roughly 400 billion it brought in in 2020,

“We are at the cusp of the great transition from traditional finance to online finance,” founder and Chief Executive Officer Lee Seung-gun told Bloomberg. “We’ve prepared so hard and now it’s time to enjoy the thrills on the roller coaster ride.”

A roller coaster ride that Toss will start as South Korea’s second-most valuable startup, trailing only game maker Krafton Inc. which is headed toward what is expected to be South Korea’s largest IPO.

But Toss is in no great hurry to enter the public markets. The firm’s long-term goal is to be a $100 billion company, and thus they are not looking for a swift exit via IPO or other methods.

Tapping The Young Trading Market

Toss opened its mobile trading platform in March, and thanks to aggressive promotion, in less than two months, has recruited over 2 million users — a milestone that took Robinhood two years to reach. Three months in, Toss has 3.5 million users and expects to reach 5 million by the end of this year. That fast growth has been driven by a flood of consumers in their 20s and 30s joining the market with money and free time, both resulting from the pandemic.

In 2020, the number of people under age 40 who held securities accounts more than doubled in the nation to nearly 3.2 million, according to data from the Korea Securities Depository, while securities held by younger consumers soared by 98 percent. And it is a trend Toss anticipates will carry on long past the pandemic — as its planning to further expand its securities trading service next quarter by adding U.S. equities and ETF trading.

The Digital Lending Landscape

According to its founder, Toss is wading more deeply into consumer lending and into direct competition with traditional incumbents like KB Financial Group Inc. and internet-only rivals such as Kakao Bank. About 23 percent of loans in Korea were made through online lenders last year, an increase from 13 percent in 2019 and 8 percent in 2018, Lee said.

“The transition to online is getting faster and I think 40% of credit loans will be transferred through online platforms next year,” Lee noted. “This and next year are likely to be the biggest transition periods.”

Taking On The World

Toss is pushing out of its home market deeper into Southeast Asian markets. So far, it is present in the Vietnamese market with 3 million monthly active users currently on the path to reach 5 million by the end of this year. And Vietnam is a starting point. According to Lee, Toss aims to expand further and enter other nations in the region within the next two years. Meaning Toss’s competitive field is about to get a lot wider- taking on popular local players like Vietnam’s Momo while simultaneously bumping up against global super-app players like Ant and Grab,

But Toss takes on the market with the instinct to do what Emmalyn Shaw, managing partner at investment firm Flourish Ventures, told Karen Webster earlier this year. Every smart super app player is finding a way to do it, despite the many varied and zig-zagging paths players are taking.

The worldwide push, playing out over various pathways, is “in pursuit of the end-to-end digital journey,” she said, “the global trend that we are moving toward is around embedded finance.”

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