Klarna raises $800 million as valuation plunges 85% to $6.7 billion

Stockholm-based buy now, pay later company Klarna announced that it has raised $800 million at a $6.7 billion valuation, representing an 85% drop on its $45.6 billion valuation a year ago. In June 2021, the company had announced that it raised $639 million at a $45.6 billion valuation. 

“The investment is of $800m in common equity and at a valuation 3x times higher than back in 2018, outperforming Klarna’s public peers for the same time period. Klarna has not been immune to the significant downdrafts of fintech stock in public markets. The company’s peers are down 80-90% vs peak valuations and consequently the adjustment in Klarna’s valuation is on par with its public peers from its $45.6bn valuation in June 2021”, the company said in a blog post. 

Before hitting a $45.6 billion valuation in June 2021, Klarna was valued at $5.5 billion in 2019, followed by $10.6 billion in 2020, and $31 billion in March 2021. 

Sebastian Siemiatkowski, CEO of Klarna said: “Klarna is the only fintech in the world that has been profitable for its first 14 years of existence. In 2017 Klarna recorded a 12% EBT margin. The last few years however we have made significant investments as we took the opportunity to transform Klarna into a global player. With the recent shift in investor sentiment we also now shift our focus and look forward to returning to a modus operandi of growth and profitability. The foundation for a global leader has been set.” 

The company plans to use the funding to expand its market position in the United States. The new funding round includes several new and existing investors, including Sequoia, Bestseller, Silver Lake, Commonwealth Bank of Australia, Mubadala Investment Company and Canada Pension Plan Investment Board (CPP Investments).

Ibrahim Ajami, Head of Ventures and Growth at Mubadala Investment Company said: “Klarna remains a driving force in revolutionizing the payments market. Consumers today demand – and deserve – more control and flexibility over their finances, and Klarna’s offering, global reach and continued innovative approach demonstrates the value of their payment solution for customers everywhere. We are thrilled to be partnering with a generational company and look forward to supporting Sebastian and his team on this next stage of growth.”