Reports: FinTech startup Klarna could receive over $ 40 billion valuation in new funding round

Klarna Bank AB is raising funds worth more than $ 40 billion, according to a series of new reports.

The news was the first reported by Business Insider early this morning. Three sources later told Reuters that the cycle could bring Klarna’s valuation closer to $ 50 billion to $ 40 billion, while CNBC quoted a tipster as saying that SoftBank Corp.’s Vision Fund 2. is one of the participating investors. Klara is expected to raise less than $ 1 billion in the cycle.

Swedish company Klarna provides a platform that online retailers can use to allow their users to pay for their purchases in installments at a later date. The startup’s installed base includes more than 250,000 retailers worldwide, including major brands such as Macy’s Inc. and Sephora USA Inc.

According to Klarna, companies adopting its platform are seeing a more than 40% increase in average order value. Retailers who use the platform can offer customers the option of paying in four interest-free installments, paying 30 days after purchase, or spreading payments over 36 months. Klarna also offers to help retailers expand their reach in the market by giving them access to its eponymous mobile shopping app, which has 18 million monthly active users.

The startup earns money by taking a share of every purchase. Klarna’s payment commissions generated more than $ 1 billion in revenue for the startup in 2020, it disclosed in March. Klarna helped process more than $ 53 billion in purchases that year for some 87 million consumers.

If Klarna does indeed close the reported funding round at a valuation of over $ 40 billion, it would become one of the most valuable startups in the world. Many of the other startups with valuations over $ 10 billion are also competing in the FinTech segment. The online payment processing provider Stripe Inc. is worth $ 95 billion since a $ 600 million round in March, while Plaid Inc., whose technology allows consumers to connect their bank accounts to services like personal finance apps, reportedly received a valuation of $ 13 billion a month later.

The high valuations of startups in the fintech segment reflect the significant growth opportunities that investors see in the future. In Klarna’s case, the startup’s platform for simplifying online shopping is a well-positioned place to capitalize on the continued increase in e-commerce activity. Another element of Klarna’s growth is that its large existing customer base, which includes more than a quarter of a million retailers, could give the start-up the opportunity to expand its business by introducing additional financial services. for traders.

A number of large fintech startups are pursuing a similar product-centric expansion strategy. Over the past five years, Stripe has extended its reach beyond its primary payment processing platform by introducing several additional offerings, including in-store payment devices and tools for businesses selling subscription services. Revolut Ltd., a digital bank would have fundraising over $ 10 billion, also extended its range of features in recent years.

Klarna has raised around $ 3.1 billion in funding to date and was most recently valued at $ 31 billion. In February, CEO Sebastian Siemiatkowski (pictured) mentionned the startup could go public this year or next.

Photo: Klarna