Momo is racing to capitalize on the pandemic-driven rush to mobile payments that has swept across Southeast Asia. Prior to the pandemic, Vietnam was, as most developing countries tend to be (and even some developed ones like Japan), a laggard in cashless payments adoption.
Cash might have remained king in Vietnam much longer if not for covid, but there is no turning back now. As of August 2020, mobile payment transactions had reached 700 million, an increase of 980% over the same period in 2019, according to data compiled by Vietnam's government.
Momo's key backers are bullish about the company's prospects. Citing Vietnam's cashless boom, high internet penetration rate and growing middle class, Warburg Pincus managing director and head of Southeast Asia Jeffrey Perlman said, "We strongly believe MoMo has the opportunity to win the mobile payments market and replicate the growth story of the top mobile platforms in Asia,” according to Bloomberg.
Other investors in Momo's latest funding round include Affirma Capital Singapore Pte, Kora Management, Macquarie Capital and Tybourne Capital Management. The Vietnamese payments startup previously raised $33.7 million in Series A and B rounds involving Goldman Sachs. and Standard Chartered Private Equity. Momo has not disclosed how much it raised in its Series C round.
Momo says that it processed US$14 billion in transactions last year while revenue grew 2.5 times - although it has not specified the figure. It is unclear when the company expects to break even.
The company does foresee an exit ramp for investors within the next few years. Momo CEO Pham Thanh Duc told Reuters that an IPO could come in the 2021-2025 period, and later added, "possibly 2025."
While Momo is branding itself as a super app, that should be taken with a grain of salt. Momo is an e-wallet that also offers insurance payments, digital marketing for merchants and processing of small donations. It does not have messaging, entertainment or e-commerce services.
Looking ahead, Momo aims to expand into microlending (maximum loan amount of 5 million dong/US$217) and investments by building a platform that links users with financial institutions.