Klarna valued at $ 46 billion in funding round led by SoftBank

LONDON – Swedish fintech firm Klarna said Thursday it raised $ 639 million in a new round of funding led by SoftBank, valuing the company at $ 45.6 billion.

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

The latest investment in Klarna, which was led by SoftBank’s Vision Fund 2, consolidates its status as Europe’s leading fintech unicorn and the second-largest fintech company by valuation after Stripe. Adit Ventures, Honeycomb Asset Management and WestCap Group also invested, Klarna said.

“Consumers continue to reject interest- and fee-laden revolving credit and are moving toward debit as they seek retail experiences that better meet their needs,” said Sebastian Siemiatkowski, founder and CEO of Klarna, in a statement Thursday.

“The most transparent and convenient alternatives align with the changing preferences of global consumers and drive global growth,” he added.

Klarna, a regulated bank, promotes itself as an alternative to credit cards, an industry the company considers harmful to consumers. But it has faced 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 charging merchants a fee every time a customer makes a transaction. He says merchants who use his service often see increased sales as a result. The company’s competitors include Afterpay and Affirm of Australia, the American financial technology firm of PayPal co-founder Max Levchin.

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

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

Swedish battery maker Northvolt said this week that it had raised $ 2.75 billion in one round by valuing the company at $ 11.75 billion. Last year set a record for European technology, with startups on the continent raising $ 52 billion, according to Pitchbook. As of June 7, European startups had already raised $ 45 billion since the start of 2021.

“International money is pouring into Europe,” Hans Otterling, a general partner at Northzone and an early investor in Klarna, told CNBC. “For Silicon Valley, the talent pool has been depleting for some time. We have a huge talent pool in Europe ”.

Klarna’s other backers include artists such as Chinese financial technology giant Ant Group and American rappers Snoop Dogg and ASAP Rocky.

Siemiatkowski told CNBC earlier this year that Klarna could seek a listing on the stock market as early as this year. The company recently hired former HSBC executive Niclas Neglen as its chief financial officer. Siemiatkowski suggested that the company could be listed through a direct listing, such as Spotify.

Klarna suffered a data breach last month, and users reported that they had accidentally logged into other people’s accounts. The company temporarily closed its application. In a blog post, Klarna said that the issue, which affected more than 9,500 users, was an error caused by “human error” and that it had “reported it to the proper authorities.”

The company was ranked No. 5 on last year’s CNBC Disruptor 50 list.

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