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Klarna, a Swedish payments company with a big name in online retail, has raised $639 million in a funding round led by Tiger Global Management, the private equity firm. The round brings the company’s total raised to $1.8 billion since the firm was founded in 2006. It was the biggest round of fundraising for a Swedish tech company ever.
Swedish e-commerce giant Klarna wants to revolutionize the way you pay. It’s already the biggest company on the continent, with over $7 billion in revenue last year, and it’s now aiming to further expand its empire. Yesterday, the company announced it’s raised over $639 million in a series of funding rounds, led by unicorn investment firm Tiger Global Management. That’s a pretty impressive sum, which will help it go after a number of its rivals, including startups like Shopify Payments, which had raised over $160 million in funding when it was acquired by PayPal last year.
After raising a staggering $639 million in its latest funding round, Sweden’s Klarna has set its sights on becoming a global giant in online payments. This week Klarna announced that it plans to launch a service that will allow users to pay for things like clothing and groceries with cryptocurrency. The service, which will be called Klarna Wallet, will be fully integrated with bitcoin and allow users to pay for everyday items with their virtual wallet.
Klarna, the Swedish fintech giant specializing in buy now, pay later technology, announced today that it has received $639 million in funding. The funding round was led by SoftBank’s Vision Fund 2 and also included well-known companies like Silver Lake, China’s Ant Group, H&M and Sequoia Capital. The latest round of funding brought Klarna’s valuation to $45.6 billion. This is a significant jump from an estimate of $31 billion in March 2021 and $11 billion in September last year. This ranking confirms that Klarna is the most valuable private fintech company in the world after Stripe.
Alternative to credit card
Klarna offers customers of major retailers like H&M and Sephora the opportunity to buy now and pay later. This service allows customers to split their purchases into four equal payments. Customers receive a one-time card for these purchases.
Each time you create a one-time use card with Klarna, you will receive a unique card number that you can use at checkout, just like a regular credit card. Each single-use card then follows a selected payment plan that can be paid for and managed through the website or mobile app. It can be linked to your credit or debit card. The biggest advantage of these single-use cards is the ability to make automatic payments on fixed dates.
According to Klarna data, 44% of shoppers would abandon a purchase if there were no four payment options, and 45% of shoppers would spend more per order if a payment plan was available. In exchange for this service, Klarna charges merchants a fee for each transaction. The company is very successful in Europe, where it has 87 million active users and annual revenues of $1.2 billion in 2020. Klarna dominates the market for immediate payments and deferred purchases in Europe, but its main competitors in other regions are Australia’s Afterpay and US fintech company Affirm.
With this latest round of funding, the company plans to aggressively expand globally, especially in the United States. By the end of 2020, the company had 14 million users in the US, with 60,000 average daily downloads by December 2020. The company noted that there is overuse of credit cards in the United States and believes that millennials have a desire for such technology.
Another advantage the company sees in the United States is a more flexible regulatory system. In the UK, the company has come under strict regulatory scrutiny following the UK Treasury’s decision in February to transfer oversight of the buy now, pay later sector to the Financial Conduct Authority (FCA). The company was recently considering a future IPO on the London Stock Exchange, but the increased focus on expansion in the US may lead it to consider US exchanges as well.
Klarna, the Swedish payments startup that has grown to become Europe’s largest online payments company, has raised $639 million in a round of funding led by Japanese retail giant Rakuten. The funding brings Klarna to a valuation of $10.8 billion, according to the company. Rakuten, which also owns the popular e-commerce site Rakuten Ichiba, joined Klarna’s existing investors, including T. Rowe Price, Warburg Pincus, and General Atlantic.
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