Klarna announces $650m funding round

By Robin Amlot

Klarna, the global payments and shopping service, has raised $650 million in an equity funding round, at a post money valuation of $10.65 billion, which ranks Klarna as the highest-valued private FinTech in Europe and the 4th highest worldwide.

The funding round was led by Silver Lake, which has more than $60 billion in combined assets under management, alongside GIC – Singapore’s sovereign wealth fund – as well as funds and accounts managed by BlackRock and HMI Capital. At the same time, Merian Chrysalis, TCV, Northzone and Bonnier acquired shares from existing shareholders. They will join current investors including Sequoia Capital, Dragoneer, Permira, Commonwealth Bank of Australia, Bestseller Group and Ant Group in supporting Klarna’s future growth.

Klarna said the funding will be invested in its shopping offering, especially in the US where the company now has more than 9 million consumers.

Klarna’s direct to consumer app, which enables users to shop at any store or brand online with instalment payment options, has more than 12 million monthly active users worldwide, with 55,000 daily downloads. In the app, consumers may now ‘wishlist’ their favourite items, access discounts, set up price-drop notifications and track spending and deliveries. The app also features pay later shopper loyalty program Vibe, which rewards consumers who pay on time, to encourage responsible spending. Vibe is currently available to consumers in the US and will soon be launched in additional markets.

Klarna has seen a surge in demand, adding 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, SHEIN, Charlotte Tilbury, Vans, The North Face, Ted Baker, Timberland and Ralph Lauren.

Klarna reports volume and revenue for the first half of 2020 grew 44% and 36% year-on-year to more than $22 billion and $466 million respectively.

Sebastian Siemiatkowski, co-founder and CEO of Klarna, said: “We are at a true inflection point in both retail and finance. 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’s unique proposition, consumer preference and global retailer network will prove an excellent platform for further growth. The Klarna team is honoured to welcome such world class investors to support our mission to become the world’s favourite way to shop.”

Egon Durban, Co-CEO and Managing Partner, and Jonathan Durham, Managing Director, of Silver Lake, said: “Klarna is one of the most disruptive and promising FinTech companies in the world, redefining the ecommerce experience for millions of consumers and global retailers, just as ecommerce growth is accelerating worldwide and rapidly shifting to mobile.”

John Doran, General Partner, TCV, said: “Klarna’s payments solutions offer a very compelling value proposition to both merchants and consumers as shown by its remarkable customer stickiness and impressive growth. We have been tracking Klarna’s continued execution for some time and are delighted to be able to partner with Sebastian and the entire Klarna team to help support their journey as they continue to serve a very large and rapidly growing global ecommerce market.”

Numis acted as exclusive financial advisor and placement agent to Klarna.

Josep Alvarez, Head of UK Banking Practice, everis UK – an NTT DATA company – commented: “Klarna is a classic FinTech success story. Its tech-driven approach to banking has fuelled rapid user growth with an approach to payments that puts the needs and convenience of the customer first.

“Klarna’s digital business model, free from reliance on ‘brick and mortar’ branches like the incumbents of the banking industry, also ensured it was primed to benefit from the acceleration in online commerce with the arrival of the COVID-19 pandemic.

“Indeed, the ‘buy now, pay later’ model seems tailor-made for the economic needs of the pandemic. Customers receive flexible, interest-free re-payment plans, enabling them to manage their money and spend with confidence – benefiting retailers during a challenging economic environment in the process.

“The big challenge for Klarna going forward will be living up to this titanic new unicorn valuation. Industry observers will be looking to see how Klarna utilises this new investment to support future growth in key markets like Europe, US and beyond – plus assuaging lingering concerns about the management of its large H1 credit losses.”