Klarna valued at $46 billion in SoftBank led funding round

Klarna CEO Sebastian Siemiatkowski at the launch of the online payment start-up’s pop-up store in London.

Dave Benett | Getty Images for Klarna

LONDON – Swedish fintech company Klarna announced Thursday that it has raised $ 639 million in a new round of funding led by SoftBank and valued the company at $ 45.6 billion.

Klarna is one of the largest providers of “buy-now-pay-later” services that enable people to finance their purchases interest-free over a period of monthly installments. These services have been particularly popular since the coronavirus pandemic began.

The latest investment in Klarna, led by SoftBank’s Vision Fund 2, solidifies its status as Europe’s top fintech unicorn and the second largest fintech start-up after Stripe. Adit Ventures, Honeycomb Asset Management and WestCap Group also invested, Klarna said.

“Consumers continue to turn down interest-bearing and fee-based revolving loans and move to the debit card while at the same time looking for retail experiences that better suit their needs,” said Sebastian Siemiatkowski, founder and CEO of Klarna on Thursday.

“More transparent and convenient alternatives are adapting to evolving global consumer preferences and driving global growth,” he added.

Klarna, a regulated bank, is touting itself as an alternative to credit cards, an industry the company considers harmful to consumers. However, it is under increasing scrutiny in the UK, where the government is calling for new rules to bring regulatory oversight to the ‘buy now, pay later’ sector.

Klarna makes money by collecting a fee from merchants every time a customer makes a transaction. Dealers who use his service often see an increase in sales as a result. The company’s competitors include Afterpay from Australia and Affirm, the American fintech company of PayPal co-founder Max Levchin.

Klarna achieved record annual sales of $ 1.2 billion in 2020. However, due to increased costs associated with international expansion, losses also increased by 50% to approximately $ 109.2 million.

The investment is the latest in a series of large investments in the European technology sector.

Swedish battery maker Northvolt said this week it raised $ 2.75 billion in one round and valued the company at $ 11.75 billion. Last year marked a record for European technology, with startups on the continent raising $ 52 billion, according to the pitchbook. June European start-ups had already raised 45 billion US dollars since the beginning of 2021.

“The international money is coming to Europe,” Hans Otterling, general partner at Northzone and an early investor at Klarna, told CNBC. “The talent pool for Silicon Valley has been exhausted for some time. We have a huge talent pool in Europe.”

Other supporters of Klarna include the Chinese fintech giant Ant Group and the US rappers Snoop Dogg and ASAP Rocky.

Siemiatkowski told CNBC earlier this year that Klarna may seek a listing later this year. The company recently hired former HSBC manager Niclas Neglen as chief financial officer. Siemiatkowski suggested that the company could be listed through a direct listing like Spotify.

Klarna was hit by a data breach last month that resulted in users reporting being accidentally signed into other people’s accounts. The company has temporarily closed its app. In a blog post, Klarna said the problem, which has affected more than 9,500 users, is a bug caused by “human error” and that “the appropriate authorities have been notified”.

The company ranked 5th on CNBC Disruptor 50 last year.

SIGN IN for our weekly original newsletter that goes beyond the list and offers a closer look at CNBC Disruptor 50’s companies and the founders who continue to innovate in all areas of the economy.

Comments are closed.