‘Pay-as-you-go’ app Klarna soars to a mind-boggling $45.6 billion valuation
App for deferred payments Klarna’s latest fundraising round boosted its valuation to $45.6 billion, aided by an investment from Japan’s SoftBank.
The “buy-now-pay-later” company now has a market capitalization of $639 million, making it Europe’s most valuable privately held financial technology company.
As with competitors Afterpay and Affirm, Stockholm-based Klarna enables consumers to take items home and then pay for them in a series of smaller interest-free payments. Consider it “layaway with a twist.”
H&M, IKEA, Sacks, Macy’s, Urban Outfitters, and Etsy are among the company’s retail partners. According to the company, it has partnered with 250,000 brands and has 18 million users worldwide.
Despite some cash-strapped consumers’ reservations during the pandemic, Klarna thrived, more than tripling its valuation in the last year.
The company was valued at $11 billion in a September 2020 fundraising round. That figure was $31 billion in March 2021.
The Financial Times reported that Klarna is considering going public in either London or New York in the near future.
Dan Ives, a technology analyst at Wedbush Securities, attributed Klarna’s extraordinary valuation increase to the company’s growth potential, particularly in the United States.
“It has ascended to the summit of European unicorns and is aggressively pursuing the US market,” Ives told the Post. “The valuation is astronomical, but the company is pursuing a trillion-dollar market opportunity.”
Thursday’s investment round was led by SoftBank’s renowned technology investment vehicle “Vision Fund 2,” with existing investors Adit Ventures, Honeycomb Asset Management, and WestCap Group also participating.
H&M, Silver Lake, Jack Ma’s Ant Group, and venture capital firm Sequoia Capital are also Klarna investors.
Klarna, founded in 2005, positions its buy-now-pay-later business model as a threat to credit card companies, claiming that its system is more equitable and efficient.
“Consumers continue to shun interest- and fee-heavy revolving credit in favor of debit,” Klarna founder and CEO Sebastian Siemiatkowski said on Thursday. “I’m extremely proud of the investors who believe in Klarna’s ambition to disrupt these outmoded models by providing consumers with fair, transparent, and convenient products to help them bank, shop, and pay on a daily basis.”
Klarna recently suffered an embarrassment in May, when an app bug allowed approximately 90,000 users to view personal information about other users, including their full names, addresses, phone numbers, and emails. According to the company, no financial information was exposed.