Klarna raises $650m funding at $10.6bn valuation
Klarna has closed its $650 million in an equity funding round, at a post money valuation of $10.65 billion.
The Swedish-based buy now, pay later (BNPL) firm has doubled its value which was previously set at $5.5 billion just over a year ago.
The valuation ranks Klarna as the highest-valued private fintech in Europe, and the fourth highest worldwide.
Silver Lake private equity firm put $500 million into the round, according to WSJ sources. Singapore’s sovereign wealth fund GCI and accounts managed by BlackRock and HMI Capital, also participated in the funding.
Additionally, Merian Chrysalis, TCV, Northzone and Bonnier have acquired shares from existing shareholders. They will join current investors such as Sequoia Capital, Dragoneer, Permira, Commonwealth Bank of Australia, Bestseller Group and Ant Group in supporting Klarna’s future growth.
The funding will help Klarna further invest in its shopping offering, continue its expansion across all markets. It’ll focus its growth in the US where the company claims to have more than 9 million consumers.
The BNPL fintech claims to have more than 12 million monthly active users worldwide on its app, with 55,000 daily downloads.
The app also features a BNPL shopper loyalty program, Vibe, which rewards consumers who pay on time, to encourage responsible spending. Vibe is currently available to consumers in the US and will soon be launched in additional markets.
Klarna saw its losses increase by around 85% in the first half of this year, compared to the same time last year.
In January – June 2019, Klarna suffered net losses of SEK 83.53 million ($9.52 million). But in the first six months of this year, the fintech was hit with a much larger $62.98 million in net losses.
Despite the losses, the fintech has seen a surge in demand. It has added more than 35,000 new retailers during the first half of 2020 to its network of more than 200,000 retail partners.
Its volume and revenue for the first half of 2020 grew 44% and 36% year-on-year to more than $22 billion and $466 million respectively.
“We are at a true inflection point in both retail and finance. The shift to online retail is now truly supercharged and there is a very tangible change in the behaviour of consumers who are now actively seeking services which offer convenience, flexibility and control in how they pay and an overall superior shopping experience,” says Sebastian Siemiatkowski, co-founder and CEO of Klarna.
The BNPL sector has recently reached new heights due to consumer spending habits amid COVID-19. The sector in general is experiencing further growth, at a rate of 32%, according to data from Worldpay and FIS.
San Francisco-based lendtech, Affirm, is considering an initial public offering (IPO) at a valuation of up to $10 billion. Sezzle recently raised $60 million and formed a partnership with Plaid. Afterpay also went public this year, whilst Fly Now Pay Later landed £35 million in a Series A funding round.
Josep Alvarez, head of uk banking practice, everis UK – an NTT DATA company – highlights the obstacles that lie ahead for Klarna.
“The big challenge for Klarna going forward will be living up to this titanic new unicorn valuation,” says Alvarez.
“Industry observers will be looking to see how Klarna utilises this new investment to support future growth in key markets like Europe, US and beyond – plus assuaging lingering concerns about the management of its large H1 credit losses.”