Klarna is now officially Europe’s highest valued private fintech company.
The Swedish online payments firm says it has raised $650 million in an equity funding round, valuing the company at $10.6 billion. The round was led by Silver Lake Partners, alongside GIC, Singapore’s sovereign wealth fund, as well as BlackRock and HMI Capital.
A regulated bank, Klarna is mostly known for its “buy now, pay later” model that offers shoppers interest-free financing on retail purchases over a period of installments. Klarna pays a merchant once a customer buys something using its platform, while users are later invoiced over a number of installments. Its regional competitors include British banking app Revolut and payments software maker Checkout.com.
Revolut, Klarna and Checkout had all been valued at $5.5 billion, according to CB Insights’ unicorn tracker, before the deal.
The company also competes with the likes of U.S.-based Affirm, which is led by PayPal co-founder Max Levchin, and Australia’s Afterpay. Last month, Afterpay said it had agreed to buy Spanish firm Pagantis in a deal that allows it to expand into Europe, effectively challenging Klarna.
To date, the Klarna app has more than 12 million monthly active users worldwide, with 55,000 daily downloads, which the company claims is almost three times as many downloads as its closest competitor over the last year.
Klarna ranked No. 5 on this year’s CNBC Disruptor 50 list.
“We are at a true inflection point in both retail and finance,” Klarna co-founder and CEO Sebastian Siemiatkowski said in the deal announcement. “The shift to online retail is now truly supercharged and there is a very tangible change in the behaviour of consumers who are now actively seeking services which offer convenience, flexibility and control in how they pay and an overall superior shopping experience.”
Klarna is experiencing rapid U.S. growth as the country continues to feel the effects of the Covid-19 pandemic. As a result of the accelerated switch to online retail and evolving consumer preferences, the company has added more than 35,000 new retailers during the first half of 2020 to its network of more than 200,000 retail partners, including Sephora, Groupon and Ralph Lauren.
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