Klarna reportedly raising funds at a $6.5B valuation, giving new meaning to the phrase ‘down round’
- ByStartupStory | July 2, 2022
The Swedish buy now, pay later giant Klarna is allegedly close to signing a new round of investment that would reduce its valuation to $6.5 billion, or around 1/7 of what the business was valued at in June 2021. This development is seen as a sign of the times. The transaction is still pending.
However, if successful, it will mark a significant reversal of fortune for Klarna, which was enjoying success when it secured $639 million in a round headed by SoftBank’s Vision Fund 2 at a valuation of $45.6 billion last year.
According to anonymous sources, Klarna was “negotiating to raise approximately $650 million from existing investors led by Sequoia Capital, with the remainder coming from other investors.” Michael Moritz, chairman of Sequoia, also serves as chairman of the troubled payments behemoth.
In order to compete with companies like publicly traded Affirm, Klarna has been making a significant push into the American market. Early in June, Klarna reported that its “U.S. customer base has expanded by over 65 per cent, reaching over 25 million users,” over the previous year. The buy now, pay later (BNPL) market as a whole has recently suffered, but the enormous decline in Klarna’s price gives the term “down round” a whole new meaning.
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