Fintech Startup Company Klarna Announces $1 Billion Private Equity Round

By James White Tuesday, March 2, 2021

After the results of a recent $1 billion private equity funding round, Swedish fintech startup and app business Klarna achieved a whopping $31 billion post-money valuation, making the buy now pay later (BNPL) company the highest-valued private fintech business in Europe.

“At Klarna, we solve problems - that is the heart of what we do for both consumers and retailers,” said Sebastian Siemiatkowski, co-founder and CEO of the fintech startup company. “Consumers want transparent products to help them bank, shop, and pay that reflect the way they live their lives, not just outdated traditional models.”

A person paying for something on their smartphone.

In a press release from the startup fintech business, the company announced that it will pledge 1% of the capital raised to a new initiative focusing on sustainability projects, which is slated to be officially launched on World Earth Day, April 22.

“Each and everyone of us at Klarna will continue to work hard on this, but it is also time for us, with our culture of change, disruption and innovation, to focus on tackling bigger, more complex issues,” Siemiatkowski said. “I believe our industry has a responsibility to help in some way solve global sustainability issues, and I hope others will join Klarna in our ambition.”

Offering Payment Plans Without the Need for a Credit Card

Since the founding of the fintech app company in 2005, investors including Sequoia Capital, Macy’s, and even Snoop Dogg have poured over $3 billion in support of the startup business. Klarna was among the early adopters of the BNPL platform that has since grown in popularity among consumers.

Klarna’s buy now pay later app platform allows users to make payments on purchases over 30 days, broken into four interest-free installments. There’s no need for a credit card; a debit card will suffice for those looking to avoid opening credit accounts.

The app startup company has already partnered with over 250,000 businesses, including Adidas, H&M, Abercrombie & Fitch, and GameStop. Users can also shop through the Klarna mobile app, which includes offerings from all of the businesses partnered with the startup fintech company. In addition, the app offers exclusive deals, tracking information on shipments, and other useful features.

Competition in the BNPL Fintech Business

The buy now pay later startup company reported a 40% increase in net operating income during 2020, breaking over $1 billion for the year. The fintech business also claimed that “87 million global active consumers chose Klarna as the preferred platform to shop, pay and bank in 2020.”

As Klarna continues to grow in the US, it will likely face fierce competition from other companies in the buy now pay later industry like Affirm. Affirm sports a $23.54 billion market cap, with stock prices currently running investors $91.44 per share.

About the Author

Headshot of James White

James White is a Michigan State University graduate with a BS in Environmental Biology. He is interested in reporting emerging trends in technology, especially with regard to alternative energy and environmental conservation.

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