Klarna raises a whopping €830M in funding at a valuation of €25.7B; now crowned as Europe’s most valuable fintech startup

Klarna raises a whopping €830M in funding at a valuation of €25.7B; now crowned as Europe’s most valuable fintech startup

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Sweden-based fintech startup that provides e-commerce payment solutions to merchants and shoppers, Klarna, has raised $1B (approx €830M) in an equity funding round with an aim to accelerate international expansion and further capture global retail growth. With 4 times oversubscribed, the round saw participation from a combination of new and existing investors.

This fundraise takes the company’s total post-money valuation to $31B (approx €25.73B), and now claims the title of Europe’s top tech unicorn, surpassing the recent payments software firm Checkout.com which hit a €12.3B valuation earlier this year in January.

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Use of the funds

Klarna has also announced to keep aside 1 per cent of the raised capital to a newly created initiative that focuses on key sustainability challenges around the world. 

The initiative will be formally launched on April 22nd on World Earth Day.

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want transparent products to help them bank, shop, and pay that reflect the way they live their lives, not just outdated traditional models.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

Everything about Klarna

Founded in 2005 in Stockholm by Sebastian Siemiatkowski, Niklas Adalberth, and Victor Jacobsson, Klarna is an e-commerce payment solutions platform for merchants and shoppers. Klarna is a regulated bank known for its “buy now, pay later” model that offers shoppers interest-free financing on retail purchases over a period of instalments.

Besides, consumers can browse and shop at any brand online with Klarna payment options, track spending and available balances, add favorite items to wishlists, access tailored discounts, receive price-drop notifications, track deliveries intelligently and join Klarna’s new loyalty program, Vibe. 

In addition, the company also offers direct payments, pay after delivery options, and instalment plans. 

The fintech has over 200,000 retail partners including giants such as H&M, IKEA, Expedia Group, Samsung, ASOS, Peloton, Abercrombie & Fitch, Nike, and AliExpress. 

With over 3,500 employees in 17 countries, Klarna’s investors include Sequoia Capital since 2010 and more recently, Dragoneer, Bestseller Group, Permira, Visa,  Atomico, Ant Group and Silver Lake, HMI Capital, and TCV, amongst others.

The company has also launched new products including savings accounts in Sweden, current accounts in Germany, and Klarna’s Vibe loyalty program in the US and Australia enhanced consumer acquisition and retention, and drove adoption of the Klarna app to a record 18 million monthly global users.

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With the global retail sales expected to reach $27T by 2022, Klarna’s business too made a strong growth in volume and revenue growth for 2020; it grew 46 per cent and 40 per cent year-on-year to more than $53B and $1B respectively.

According to the company’s 2020 report, its strong results for last year were driven by rapidly accelerating momentum in the US, entry into four new markets, and growing consumer and merchant preference for Klarna’s elevated shopping experience and strong brand.

In 2020, Klarna recorded its gross merchandise volume with total net operating income breaking $1B. The record Gross Merchandise Volume was achieved across the Klarna platform, up 46 per cent to $53B from 2019’s $35B.

The company saw a 40 per cent increase in its total net operating income to $1.087B from 2019’s $753M, breaking the $1B threshold for the first time.

Siemiatkoski, Klarna co-founder and CEO believes, “2021 is going to be a year of change as consumers will slowly return to stores expecting to see the flexibility they have become accustomed to reflected in the brick-and-mortar experience. Klarna will continue to innovate across channels, geographies, and verticals to provide consumers with the transparency, control, and flexibility they now demand from banking, shopping, and payments, while supporting our partners in their growth ambitions.”

Accelerated growth in the US

Momentum in the US accelerated rapidly with a million consumers a month added during the key shopping period in the last quarter of 2020, with 15 million consumers choosing to shop with Klarna by January 2021. Klarna has already partnered with 20 of the US top 100 retailers. 

At the close of last quarter, Klarna was ranked in the Top 10 most downloaded shopping apps in US app stores for the entire period. Several renowned brands have joined Klarna’s US retail network, including Macy’s, Etsy, Sephora, Saks OFF 5TH, Lululemon, Bluemercury, Rebecca Minkoff, and Pandora, bringing the total number of retail partners to more than 6,000.

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