Expansion of the South Korean fintech Unicorn Eyes Ride-Hailing, synergies with mobility data
AFear South Korea’s pioneering fintech, Viva Republica, one of the country’s most valued startups, is making its first foray away from the lucrative world of finance and into the cut-throat arena of carpooling.
Viva Republica has every right to be bold: The startup, whose backers include PayPal, Sequoia Capital China and Singapore sovereign wealth fund GIC, raised $ 410 million in June for a valuation of $ 7.4 billion from the Korea Development Bank and Silicon Valley. based at Altos Ventures. The funding round made Viva Republica one of Korea’s most valued startups and catapulted its founder and CEO, Lee Seung-gun, into the billionaire ranks.
Viva Republica operates Toss, a financial superapplication with more than 20 million users in Korea, equivalent to more than a third of the country’s population. Launched in 2015, Toss started out as a money transfer service and has since expanded to offer a range of financial services, including banking, insurance and investment services. Today, almost seven years after the launch of Toss, Viva Republica is taking its first big step beyond digital finance.
Later this month, Viva Republica plans to complete the acquisition of a 60% stake for an undisclosed amount in Seoul-based VCNC, which operates a ride-sharing service in Korea called Tada. Lee is excited that, unlike insurance and payments, many people regularly use ridesharing services like Tada. “It’s an app for everyday use,” Lee said in a video interview from the fintech startup’s Seoul office. “You have to move, don’t you?” So every two or three times a day you have to use some type of mobility service. “
VCNC launched Tada in 2018 and the company claims to have around 2 million users. About 90% of Tada users regularly use the app, according to VCNC. Korea’s carpooling market is currently dominated by a unit of local internet giant Kakao, founded and run by Kim Beom-su, one of the richest people in the country. Earlier this month, SK Telecom, part of Korean billionaire Chey Tae-won’s SK group chaebol, partnered with Uber Technologies to launch its own ridesharing service, further boosting competition in Korea.
As Viva Republica faces an uphill battle in the VTC market, Lee hopes the Toss-Tada combination can create synergies and strengthen its ecosystem. “Potentially, we’re expecting a lot of data,” says Lee, 39, pointing to the success of Southeast Asian internet giants Grab and Gojek (renamed GoTo Group after merging with Indonesian e-commerce platform Tokopedia in May). “Mobility data has been the key pillar of Grab and Gojek,” he says.
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Grab and Gojek both started out as ridesharing companies. After reaching a critical mass of users, the two companies built an ecosystem of services around carpooling, including financial services. Grab and GoTo “have built robust credit score models and insurance policies because they have all the data on driver behavior,” Lee notes. For example, drivers with good passenger reviews and large amounts of transaction data (from completed trips) could benefit from cheaper interest rates and insurance policies. “These new datasets will definitely strengthen Toss’s financial ecosystem,” he says.
While Lee’s current focus is on the combination of finance and mobility, as well as further development of Toss both at home and abroad, he is not ruling out other transactions at the to come up. “We closely observe the behaviors and lives of our users,” says Lee, who experimented with SMS and group voting applications before focusing on digital finance. “If there are new issues that we can tackle, or any opportunity we may have, then we can get into this area once we decide.”