Korea Credit Data raises $75.7 million from Morgan Stanley

Korea Credit Data (KCD), a South Korean fintech startup focusing on small- and medium-sized enterprises (SMEs), has raised 100 billion won ($75.7 million) at a valuation of 1.3 trillion won from US investor Morgan Stanley Tactical Value Investing despite the prolonged startup funding winter.

The valuation is a 25-fold jump from five years ago and 200 billion won more than the company’s valuation estimated during the last funding in October 2022.

This is Korea’s first SME-focused fintech unicorn, a privately held startup with a valuation of $1 billion or more.

KCD announced on Thursday that it has attracted the latest investment in a Series D2 round from the investing arm of Morgan Stanley Investment Management, which marked the US investor’s first funding in a Korean company, thanks to its extensive financial infrastructure built for mom-and-pop businesses across Korea.

Founded in 2016, the Korean fintech startup offers SMEs various financial services in Asia’s fourth-largest economy with about 4.1 million SMEs operating in a market worth 65.9 trillion won.

Especially, KCD’s bookkeeping app, Cash Note, which enables small business owners to track their comprehensive cash flow, including revenue, credit card sales and expenditures, is the company's main service. 

Merchants using Cash Note total about 1.3 million, accounting for more than half its entire 2 million registered users, according to KCD.

The app also provides other services like ledgers and policy information.

KCD also offers other services such as a point of sale (POS) and networking for business owners where they can share information.

Morgan Stanley Tactical Value highly recognizes the extensive SME infrastructure created by KCD services.

“KCD is playing an important role in not only the SME world but also Korea’s macroeconomy,” said Kim Hyun-sung, vice president of Morgan Stanley Tactical Value who led the KCD investment.

With the latest investment, KCD has raised about 260 billion won since its inception.

Its previous backers include KB Kookmin Bank, KB Securities, GS Holdings, KT Investment, Pavilion Capital, Shinhan Card, Samsung Fire & Marine Insurance, Kakao Ventures and Kclavis.

KCD’s fresh funding is expected to expedite the digital transition in Korea’s SME ecosystem, which still relies heavily on analog ledgers and systems.

The fintech startup sees the growth potential of Cash Note services especially those in cash flow analysis, communications and owner community.

KCD plans to set up a bank specialized in SMEs with massive data secured via Cash Note.

However, it is not be easy to gain approval for the plan from Korean financial regulators, industry observers said.

Write to Eun-Yi Ko at koko@hankyung.com

Sookyung Seo edited this article.