By - Versha Jain
Highlights:
- Klarna is a fintech company headquartered in Stockholm, Sweden.
- It raised US$800 million in a funding round led by Sequoia, Bestseller, Silver Lake, etc.
- The company plans to use the fund for expanding in the US.
Swedish fintech company Klarna Bank AB raised US$800 million in a funding round at a valuation of US$6.7 billion, which dropped drastically from US$46 billion a year ago, Reuters reported.
The company said the funding round was led by existing investors like Sequoia, Bestseller, Silver Lake, and Commonwealth Bank of Australia and new investors such as Mubadala Investment Company and Canada Pension Plan Investment Board.
The Swedish company offers Buy-Now-Pay-Later (BNPL) services for a small fee per transaction. Klarna also earns interest on long-term loans to customers.
The company had earlier shown interest in a direct listing in the US. Klarna has been under pressure lately as the interest rates on its debt have been rising.
According to Bloomberg, the company posted an operating loss of US$245 million in the first quarter. To reduce costs, it cut its workforce by around 10% in May this year.
The investment of US$800 million has been made in the common equity. Klarna plans to use the fund to expand in the US, where its customers are already around 30 million.
In 2019, the startup was valued at US$5.5 billion, but in 2021, it rose to US$46 billion. Its valuation scaled back to US$6.7 billion at the latest funding.
Founded in 2005, Klarna aims to make online shopping easier for people. The company has around 147 million global active users and 400,000 retail partners, including Nike Inc., Ikea, Sephora, and Expedia Group Inc., in 45 countries. The company entered 11 new markets, including France, Italy, Canada, and Australia, between 2020 and 2021.
Commenting on the latest development, Klarna CEO Sebastian Siemiatkowski said that Klarna’s fundraising in not-so-optimistic market conditions reflects investors’ confidence in the firm.