Fresh off a $153 million funding round in March 2023, South Korean digital lender and neobank Toss Bank is close to raising another $154 million (200 billion won) in equity at a valuation of $2.1 billion (2.7 trillion won), and it is already planning a further $150 million round for the end of the year, sources familiar with the matter told ProWellTech.
The Seoul-based challenger bank is in advanced discussions for both funding injections with existing and new investors, including global private equity firms and corporations, the sources said without providing further details. In March of this year, Toss Bank raised $154 million at a valuation of $1.6 billion, a figure we have confirmed with the company directly (PitchBook notes a higher valuation that the company told ProWellTech was incorrect). At the time of its last raise, Toss Bank had raised a total of over $1.2 billion since its inception in 2021.
That round came from online retail platform Home & Shopping, Premier Partners, Korea Biotech Investment Capital and other unnamed investors. Altos Ventures, Axevil Capital, Standard Chartered Korea, Hana Bank, Goodwater Capital, Ribbit Capital, and Hanwha Investment & Securities Company are among Toss Bank’s other investors, alongside Viva Republica that operates the financial super app Toss and remains the largest shareholder, owning a 38.3% in Toss Bank.
The massive capital injections are notable for coming at a time when funding remains largely constrained globally; and also to underscore the competitive stance that Toss Bank is taking in Korea, which has a number of other challenger banks vying to compete against incumbents to lend money and help consumers with their financial affairs.
The new $154 million in funding is expected to be completed by the end of the third quarter of this year — that is, around September — according to the sources, who wished to remain anonymous since the deal is not yet public.
The two-year-old digital lender is likely to make another raise swiftly after that, of at least $150 million, aiming to complete as early as the end of 2023, the sources said. Toss Bank is raising capital to offer loans to its customers, hire more staff and expand its services like the wealth management business, they added.
A spokesperson at Toss Bank confirmed to ProWellTech that it is in the process of raising capital, but he declined to comment on its deal size and the company’s valuation. Bloomberg reported about Toss Bank’s early-stage funding talks in April.
The Korean digital lender aims to turn profitable between year-end and early next year. The company posted approximately a net loss of $203.1 million (264.4 billion won) in 2022. Its net loss each quarter in 2022 was around $46 million (60 billion won), but a net loss in the first quarter of 2023 dropped to $21.5 million (28 billion won), according to the sources. The quarterly net loss is expected to decline gradually this year, they noted.
Since being launched in October 2021 by Viva Republica, Toss Bank said it has picked up 7 million customers as of July and now has 464 employees on its team.
The internet-only bank benefits from its association with Viva Republica, which has about 26 million users and 15 million monthly active users overall. Viva Republica provides an array of financial services such as banking, money transfer, mobile-based stock trading, credit scoring, P2P lending and more in an all-in-one app, Toss.
Toss Bank is one of the three Korean online banking service providers that has received licenses from the South Korean government, along with Kakao Bank and Bain Capital-backed K Bank.