$639 Million Investment
Klarna is a Swedish fintech company and app that offers buy now pay later services for ecommerce shopping. The business sports some impressive figures as it has more than 90 million worldwide customers and 250,000 merchants that sell on the app. Additionally, the company has processed more than 2 million transactions through its buy now pay later app.
The company features products from many big-name retailers like Macy’s, Adidas, SHEIN, LuluLemon, Bose, and Bed Bath & Beyond. For each transaction processed through the app, Klarna takes a small commission fee that ranges from 3.29% to 5.99%, depending on which payment plan a customer selects.
All of this success has led to the fintech business raising $639 million in equity funding led by SoftBank Vision Fund 2. Adit Ventures, Honeycomb Asset Management, and WestCap Group also participated in this round.
According to the press statement, this new funding gives the company a valuation of $45.6 billion — making it one of the most-valued fintech companies in the world.
Sebastian Siemiatkowski, founder and CEO of the fintech business, said in a statement, “Consumers continue to reject interest-and fee-laden revolving credit and are moving toward debit while simultaneously seeking retail experiences that better meet their needs. Klarna's more transparent and convenient alternatives align with evolving global consumer preferences and drive worldwide growth…”
Klarna added that this new funding supports the exceptional growth the company has already experienced in 2021. App downloads have increased 125% year-over-year (YOY), and the fintech business launched in a new international market this week in France.
With the new capital, the company plans to explore new retail partners and international markets. In addition, 1% of the new funding, and all future funding rounds, will be given to the GiveOne initiative.
The GiveOne initiative created by the fintech business is Klarna’s commitment to supporting global environmental health through conservation and climate restoration efforts. Furthermore, the company also tracks CO2 emissions for every transaction processed through the app. Klarna hopes to decrease its emissions by 50% by 2030.
This new funding round follows a few months after Startup Savant reported the fintech business raised $1 billion — a valuation of $31 billion at the time
Buy Now Pay Later Industry
The buy now pay later industry is rapidly growing as Klarna and other buy now pay later competitors like Affirm and Afterpay are offering more innovative payment solutions to ecommerce shoppers that abandons traditional all-in-one payments at checkout.
Many fintech companies have taken note of the effectiveness and popularity of buy now pay later services. Zilch, a United Kingdom-based buy now pay later startup, has taken payment solutions one step further by offering a digital credit card to use for ecommerce shopping.
Startup Savant reported in April that Zilch raised $80 million to support business growth and product development.
Business Insider reported the global “buy now pay later” industry has the potential to reach $680 billion in sales by 2025.
About the Author
McKenzie Carpenter is a graduate of Central Michigan University with a B.A.A. in Integrative Public Relations and French. McKenzie has previously worked for small businesses and nonprofit organizations.