Klarna, a Swedish fintech company, on Monday confirmed that it has closed an $800m
financing round that brings its post-money valuation to $6.7 billion.
The company, popular for its buy now, pay later services, disclosed this in
a statement titled ‘Klarna closes major
financing round during worst stock downturn in 50 years’.
This puts to rest reports
about the company’s efforts to raise funds to top up its valuation.
However, with the new raise,
Klarna’s post-money valuation has sunk by -85% from the $45.6 billion valuation peak it hit in June 2021 after raising $639 million.
Michael Mortiz, a Partner at
Sequoia, an American venture capital firm, explained that “the shift in
Klarna’s valuation is entirely due to investors suddenly voting in the opposite
manner to the way they voted for the past few years.”
Moritz, however, believes
that investors will emerge eventually “from their bunkers” and the shares of
Klarna and other top firms will improve.
According to Klarna, whose net operating income jumped by 38% to $1.6 billion in 2021, the $800
financing is for the payments and retail banking company to expand its position
in the United States.
Klarna recently launched Klarna Kosma, a new business unit and sub-brand, to accelerate the growth of its open banking platform.
Existing investors who
committed to the new raise include Sequoia Capital, Bestseller, Silver Lake,
and the Commonwealth of Bank of Australia.
The newcomers are the
Mubadala Investment Company, a United Arab Emirates sovereign investor, and
Canada Pension Plan Investment Board, a professional investment management
organization.
Contributory Factors
Klarna said the investment
comes “during possibly the worst set of circumstances to afflict stock markets
since World War II”.
The Sweden-based fintech
company listed these adverse conditions to include high inflation, rising
interest rates, mounting fears of a recession, and the ripple effects of the COVID-19
pandemic.
It added that the strain on
commerce caused by supply chain disruptions, rising gas prices, and the impact of the Russia-Ukraine war on Europe, are also not favourable.
Klarna explained, “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.”
Sebastian Siemiatkowski, the
Chief Executive Officer of Klarna, believes that the new financing “is a
testament to the strength of Karna’s business” in the face of the steepest drop
in global stock markets in over 50 years.
Moritz pointed out that
“Klarna’s business, its position in various markets and its popularity with
consumers and merchants are all stronger than at any time since Sequoia first
invested in 2010.”
Klarna, a Swedish fintech company, on Monday confirmed that it has closed an $800m
financing round that brings its post-money valuation to $6.7 billion.
The company, popular for its buy now, pay later services, disclosed this in
a statement titled ‘Klarna closes major
financing round during worst stock downturn in 50 years’.
This puts to rest reports
about the company’s efforts to raise funds to top up its valuation.
However, with the new raise,
Klarna’s post-money valuation has sunk by -85% from the $45.6 billion valuation peak it hit in June 2021 after raising $639 million.
Michael Mortiz, a Partner at
Sequoia, an American venture capital firm, explained that “the shift in
Klarna’s valuation is entirely due to investors suddenly voting in the opposite
manner to the way they voted for the past few years.”
Moritz, however, believes
that investors will emerge eventually “from their bunkers” and the shares of
Klarna and other top firms will improve.
According to Klarna, whose net operating income jumped by 38% to $1.6 billion in 2021, the $800
financing is for the payments and retail banking company to expand its position
in the United States.
Klarna recently launched Klarna Kosma, a new business unit and sub-brand, to accelerate the growth of its open banking platform.
Existing investors who
committed to the new raise include Sequoia Capital, Bestseller, Silver Lake,
and the Commonwealth of Bank of Australia.
The newcomers are the
Mubadala Investment Company, a United Arab Emirates sovereign investor, and
Canada Pension Plan Investment Board, a professional investment management
organization.
Contributory Factors
Klarna said the investment
comes “during possibly the worst set of circumstances to afflict stock markets
since World War II”.
The Sweden-based fintech
company listed these adverse conditions to include high inflation, rising
interest rates, mounting fears of a recession, and the ripple effects of the COVID-19
pandemic.
It added that the strain on
commerce caused by supply chain disruptions, rising gas prices, and the impact of the Russia-Ukraine war on Europe, are also not favourable.
Klarna explained, “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.”
Sebastian Siemiatkowski, the
Chief Executive Officer of Klarna, believes that the new financing “is a
testament to the strength of Karna’s business” in the face of the steepest drop
in global stock markets in over 50 years.
Moritz pointed out that
“Klarna’s business, its position in various markets and its popularity with
consumers and merchants are all stronger than at any time since Sequoia first
invested in 2010.”
