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SG Lee runs Viva Republica, the startup behind money transfer app Toss. Photo credit: Viva Republica.
SG Lee took a very unusual route to entrepreneurship – through dental school.
“When I was back in high school, my family’s financial circumstances got really worse as my parents’ business didn’t go well. I chose to study dentistry in university to pay my family’s debt because having a job as a dentist in Korea guarantees a high and stable income,” Lee, 35, tells Tech in Asia. “When I went to university, fortunately, my parents’ business did well again. As it turned around I could put down my burden and rethink about what I would want to do as my career.”
After completing South Korea’s military service, he started his own business. Now he runs Toss, a simple yet sleek money transfer app that’s essentially Korea’s answer to Paypal’s Venmo.
Having already raised US$29 million from investors, Lee and the team are today celebrating their biggest boost yet – a US$47.5 million injection from Paypal, Bessemer Venture Partners, Altos Ventures, Partech Ventures, and lead investor GoodWater Capital.
Lee has steered Toss beyond transfers, adding microloans and credit score management.
Toss users – Tossers? – now number six million, and they’ve wired each other a grand total of US$3 billion since launching two years ago. The app supports cards issued by nearly all of Korea’s major banks.
Those are some strong numbers in a country of 50 million. Meanwhile, Venmo saw US$7.5 billion in transactions in 2015, and looks set to hit US$20 billion once it gets around to revealing 2016 stats.
The mobile app stems from Lee’s own frustrations spending an hour fiddling with online forms and multiple downloads just to make an online purchase.
“Mobile banking was and still is a major problem in Korea,” he says. “Financial institution infrastructures are very outdated and cumbersome to use. For instance, it you want to transfer money using a bank app, you must go through at least seven screen changes, fill in seven to 10 fields, remember multiple passwords, have an OTP device with you” – that’s a dongle which gives you a one-time password – “and must have installed a personal authentication certificate onto your device.”
Toss reduces all that to three steps: type in the recipient’s bank account or phone number, set the amount, then input your password or scan your fingerprint on your phone. And yet it’s still a secure system.
Going global
In a bid to build a fintech empire, Lee has steered Toss beyond transfers, adding microloans, credit score management, and a handy personal finance dashboard. The loans function is being tested within a small sample – about six percent – of its user base.
Next on the agenda: overseas transfers, loan brokerage, and insurance.
Also on the road map is international expansion. “Likely 2018, 2019,” Lee states.
Korea has one of the world’s highest rates of smartphone adoption, with 91 percent of the population in 2016 choosing a smartphone when buying a mobile phone. Photo credit: anizza / 123RF.
While Toss now has the blessing of Korea’s top banks, that wasn’t always the case. Indeed, the app was technically illegal when it launched.
“First, regulation is not the rock solid principle, but just an agreement among people. If you are able to make new consensus among entities like media, government, companies, customers about specific subject, regulation can be changed easier than you expected,” says the CEO.
Toss “took a year to legalize” after its launch – a scenario that Uber’s Travis Kalanick must dream about.
“And also, it is easier to do something new and hard than doing something derivative and easy, just like [Y Combinator’s] Sam Altman said. For doing something hard and new, especially when it’s really necessary for the community, people will voluntarily help you to make that vision come true,” Lee adds.
Converted from Korean won. Rate: US$1 = KRW 1,160.
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