Fintech platform Toss seeks $180 mn in fresh funding

South Korean fintech startup Toss is seeking to raise 200 billion won ($177 million) in fresh funding, which would almost treble its valuation to 8 trillion won ($7 billion) in less than a year.

The new funding round comes as the country's popular digital wallet is setting up its online bank Toss Bank in the second half of this year, following the launch of the brokerage arm Toss Securities in March this year. 

Late last year, Toss held negotiations with potential investors under the table, but recently switched to a competitive bid process, according to investment banking sources on May 21. 

Toss has recently sent information memoranda to prospective investors both at home and abroad. Bank of America Merill Lynch is handling the fundraising.

The proposed 8 trillion won valuation for Toss is more than 2.6 times its previous valuation of 3 trillion won estimated when it raised 206 billion won in new capital in August 2020. 

At the time, its investors included Aspex Management, Sequoia China, Kleiner Perkins, Altos Ventures, Goodwater Capital and Greyhound Capital. 

Toss, run by Viva Republica Inc., has raised 630 billion won in capital since its inception.

The surge in valuation may reflect expectations about its new businesses such as its brokerage and internet bank arms. But given its cumulative losses and the uncertainty about when it is able to swing to a profit, the latest valuation seems too high, industry watchers say. They cautioned that Toss may need to step up investments in both its brokerage and banking divisions over the next few years.

"Toss has been expanding into the brokerage and internet banking areas, growing into a financial services group," said one of the sources. "But now that all financial groups have jumped into the fintech market and even Kakao joined them, Toss may find it difficult to set itself apart in the competitive market."

The company's loss-making business structure and lack of IPO timetable leave investors hesitant, he added.

Last month, Kakao Bank, South Korea's No.1 mobile banking app., submitted an IPO application with an aim to list within the year. The IPO is likely to value the startup at 20 trillion won.

South Korea’s first internet-only bank, K Bank, is in its final stages of a 1.2 trillion won fundraising from existing and new investors for business expansion and diversification, according to sources on May 20. K Bank targets listing on the local stock market by 2023.

Write to Chae-yeon Kim at why29@hankyung.com
Yeonhee Kim edited this article.