Deferred payments app Klarna soared to a valuation of $45.6 billion in its latest fundraising round — buoyed by an investment from Japan’s SoftBank.
The “buy-now-pay-later” firm, which raised $639 million Thursday, is now Europe’s most valuable privately-held financial technology company.
Like competitors Afterpay and Affirm, Stockholm-based Klarna lets consumers take home items then pay for them later through a series of smaller payments with interest. Think of it as “layaway with a twist.”
The company’s retail partners include H&M, IKEA, Sacks, Macy’s, Urban Outfitters and Etsy. In total, it has partnerships with 250,000 brands and boasts 18 million users worldwide, according to the company.
Even despite hesitance among some cash-strapped consumers during the pandemic, Klarna has thrived — more than quadrupling its valuation in the past year.
In a September 2020 fundraising round, the company was valued at $11 billion. In March 2021, that number was $31 billion.
Klarna is mulling going public sometime soon in either London or New York, the Financial Times reported.
Wedbush securities tech analyst Dan Ives attributed Klarna’s astonishing valuation surge to its potential for growth, especially in the United States.
“It’s now at the top of the mountain on terms of European unicorns and aggressively is going after the US market,” Ives told the Post. “The valuation is eye-popping but it’s going after a trillion-dollar market opportunity.”
Thursday’s investment round was led by SoftBank’s famous technology investment group “Vision Fund 2,” with additional participation from existing investors Adit Ventures, Honeycomb Asset Management and WestCap Group.
Other Klarna investors include H&M, private equity firm Silver Lake, Jack Ma’s Ant Group and venture capital fund Sequoia Capital.
Klarna, which was founded in 2005, paints its buy-now-pay-later model as a threat to credit card firms, claiming that its system is more fair and efficient.
“Consumers continue to reject interest-and fee-laden revolving credit and are moving toward debit,” said Klarna founder and CEO Sebastian Siemiatkowski on Thursday. “I’m very proud of the investors who are supporting Klarna’s ambition to challenge these outdated models to empower consumers with fair, transparent, and convenient products to help them bank, shop and pay each day.”
Klarna recently faced an embarrassing hiccup in May, when an app issue caused about 90,000 users to be able to view personal information about other users, including their full names, addresses, phone numbers and emails. No financial information was exposed, according to the company.