South Korean Fintech Unicorn Eyes Ride-Hailing Expansion, Synergies With Mobility Data

After pioneering fintech in South Korea, Viva Republica—one of the country’s most valuable startups—is making its first foray away from the lucrative world of finance and into the cut-throat arena of ride-hailing.

Viva Republica has a right to be bold: The startup, whose backers include PayPal, Sequoia Capital China and Singapore sovereign-wealth fund GIC, raised $410 million in June at a valuation of $7.4 billion from the likes of the Korea Development Bank and Silicon Valley-based Altos Ventures. The funding round made Viva Republica one of the highest-valued startups in Korea and catapulted its founder and CEO, Lee Seung-gun, into the ranks of billionaires.

Viva Republica operates Toss, a finance superapp with over 20 million users in Korea—equivalent to more than one-third of the country’s population. Launched in 2015, Toss started out as a money transfer service and has since expanded to offer a suite of financial services, including banking, insurance and investing. Now, nearly seven years after launching Toss, Viva Republica is making its first major move beyond digital finance.

Later this month, Viva Republica expects to complete its acquisition of a 60% stake for an undisclosed amount in Seoul-based VCNC, which operates a ride-hailing service in Korea called Tada. Lee is excited about the fact that, unlike insurance and payments, many people use ride-hailing services like Tada on a regular basis. “It’s a daily usage app,” says Lee in a video interview from the fintech startup’s office in Seoul. “You have to move to some place, right? 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 says it has about 2 million users. Around 90% of Tada users use the app regularly, according to VCNC. The Korean ride-hailing market is currently dominated by a unit of local internet giant Kakao, founded and led by Kim Beom-su, one of the wealthiest people in the country. Earlier this month, SK Telecom, part of Korean billionaire Chey Tae-won‘s SK Group chaebol, teamed up with Uber Technologies to launch their own ride-hailing service, ratcheting up competition in Korea.

While Viva Republica faces an uphill battle in the ride-hailing market, Lee is hopeful 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 to GoTo Group after merging with Indonesian e-commerce platform Tokopedia in May). “The mobility data has been the key pillars for Grab and Gojek,” he says.

More on Forbes: Anthony Tan Drives Regional Superapp Grab Ahead With Fintech, Other Moves

Both Grab and Gojek started off as ride-hailing companies. After achieving a critical mass of users, the two companies built an ecosystem of services around ride-hailing, including financial services. Grab and GoTo “built robust credit score models and insurance policies because they have all of the data of drivers’ behaviors,” notes Lee. For example, drivers with good reviews from passengers and large amounts of transaction data (from completed trips) could receive more favorable interest rates and insurance policies. “These new data sets are definitely going to reinforce Toss’ finance ecosystem,” he says.

While Lee is currently focused on combining finance and mobility, as well as continuing to expand Toss both at home and abroad, he doesn’t rule out more deals in the future. “We closely observe our users’ behaviors and users’ lives,” says Lee, who experimented with texting and group voting apps before focusing on digital finance. “If there’s any new problems that we can tackle, or any opportunity we can have, then we can move into that area once we decide.”