Dentist and Entrepreneur takes Fintech Superapp Toss to the next level

Viva Republica CEO Lee Seung-gun is taking his financial super-app Toss to the next stage with a major boost in Southeast Asia and a blockbuster funding round — 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 was turbocharged South Korea’s mobile payments industry with his money transfer app Toss, which he then upgraded to a financial services super app. Now the former dentist is looking for a piece of the fast-growing fintech market in Asia, setting the stage for ambitious plans for global expansion. “We have banking, securities and all that in one app that gives [investors] more confidence that Toss could become number one in the entire fintech industry,” said Lee, founder and CEO of Viva Republica, which operates the app, in a video interview from his office in Seoul’s upscale Gangnam district.

To pull this off, Lee is preparing a new round of funding in the second quarter that’s valued at over $10 billion. “Many investors are already trying to reach us,” he says. This potential capital raise comes in addition to a total of $940 million in funds raised since 2014 from investors including PayPal, Sequoia Capital China and Singaporean sovereign wealth fund GIC. Most of it came last June when Viva Republica raised $410 million at a valuation of $7.4 billion, making it the highest-valued startup in South Korea according to researcher CB Insights, and Lee, who turned 40 in January years old, a billionaire. He debuts on this year’s Korea Rich List at number 36 with a net worth of $1.2 billion.

Toss was an instant hit when Lee introduced the app in 2015, making it easier for South Koreans to send money online. With 20 million downloads, its 11 million users regularly tap the dashboard with options ranging from insurance plans to loans to online investing. To test the waters beyond Korea, Lee Toss launched two years ago in Vietnam, where its cash rewards and debit card services have attracted three million monthly active users, and then expanded the push to Indonesia, Malaysia, the Philippines, Thailand and Singapore.

Undoubtedly, the market is big — according to a November report by Google, Temasek and Bain, the online lending segment in Southeast Asia alone saw $39 billion in transactions last year. But conquering the region’s burgeoning fintech market is easier said than done. Southeast Asian tech giants like Singapore billionaire Forrest Li’s Sea, Anthony Tan’s Grab and Indonesia’s GoTo are already fighting an all-out battle for the top local superapp, including fintech services, and Viva Republica will have to fight hard for market share. Unicorn startups like Tiger Global-backed Xendit in Indonesia and Singapore-based Nium, backed by the likes of Singapore-based Temasek and GIC, have also thrown their hats in the ring.

To that end, partnerships will be key. Viva Republica strategy chief 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 joined forces with Malaysia’s CIMB Group, one of Southeast Asia’s largest lenders by assets. Late last year, the company made its first overseas investment, acquiring a small stake in Republic, a US startup investment platform. “We’re not a company where we supply exactly the same product to the same nation,” Lee said in November. “We go into the market and try to learn the customers’ problems and how we can solve them [them].”

For Viva Republica to have any chance of becoming a leading global fintech, it must first become profitable, says Lee Sung-bok, a financial services industry researcher at the Korea Capital Market Institute. Revenue 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 aggressive hiring and marketing costs, the company said. Being profitable would also make it easier to go public, which is what Viva Republica is aiming for in the next three to five years.

“Toss has focused on marketing to increase its customer base. But I think Toss’ marketing strategies have mainly increased the number of cherry pickers,” he says. “In the age of digital innovation, I think it can be easy to attract external money, but it doesn’t come cheap to keep it when Toss’ business model is known to be unsustainable.”

Lee has never shied away from a challenge. “I was a dentist,” says Lee, who graduated from South Korea’s top dental school at Seoul National University. “I had no idea about IT.” After completing his military service in South Korea, the then 27-year-old met a classmate from dental school to get 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 an overwhelming experience,” says Lee. The successor to Apple’s 2008 iPhone 3G, whose revolutionary App Store transformed how smartphones are used, was twice as fast and had video recording. What intrigued Lee, however, was his 65,000 third-party apps. “The first thing that came to my mind was, ‘I want to build an app,'” he recalls.

He kickstarted his digital ambitions and hired a software engineer. Lee worked two days a week as a dentist at a Samsung-affiliated hospital to fund the company and spent the rest of his time focusing on developing an app – any app. “Even if it were [terrible] or don’t make sense,” says Lee. There was a selfie app and an app that helped submit online petitions — eight in total, but none raised any money.

Then in 2015, Lee became frustrated with how difficult it was to make an online payment in Korea. Before Toss, Koreans had to go through a 10-step process to transfer money, which required entering multiple PIN codes and passwords. Lee’s three-tier app was well received by smartphone users, and Toss gained 600,000 customers in its first year. Korea’s financial giants tried to catch up with their own offerings, and mobile payments in the country quadrupled to $4.6 billion over the next two years. But his biggest challenge, Lee says, was getting his parents’ blessing to quit dentistry and become an entrepreneur. “It was the first time I’ve actually competed against them,” he says.

Han Kim, the Korean-American co-founder and CEO of California-based Altos Ventures, recalls how inefficient mobile financing was in South Korea. “I went through screen by screen [just to transfer money]. I thought it was crazy,” says Kim, whose firm has invested in some of South Korea’s most successful startups, including Bom Kim’s e-commerce giant Coupang and Chang Byung-gyu’s online game maker Krafton (Kim is #14 on this year’s Korea Rich List with a net worth of $3.2 billion, while Chang is #25 with a net worth of $1.8 billion).

Lee’s persistence in fighting South Korea’s archaic online money transfer system has helped Toss succeed, says Kim. He helped open up the conservative financial services industry by convincing regulators of the benefits of change, such as convenience and efficiency. “At its inception, fintech is a win-win business that creates high value for consumers through its innovations,” Lee said at an industry meeting in 2015 with regulators, government officials and then-President of South Korea Park Geunhye.

Kim, who was the first investor to back Viva Republica, says what sets Lee apart is his open-mindedness. “When he’s wrong, he admits he’s wrong, which is a rare trait in a lot of people,” says Kim. Toss regularly introduces new features to complement its existing services. At one point, three new features were introduced every week for six months, keeping those that worked and ending those that didn’t. “We want everyone to be accomplished and error-friendly,” says Lee of the corporate culture at Viva Republica. “If you fail, you just keep improving until you finally succeed.”


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