Swedish fintech firm Klarna, which raised its valuation to almost $46bn nearly a year ago, is looking to raise additional funds at a lower valuation, WSJ reported citing people familiar with the matter.
The firm, which specialises in buy-now-pay-later (BNPL) offerings, is aiming to secure funds at about a third less than its current valuation.
Klarna become the highest-valued private fintech in Europe with its $639m funding round in June last year. The round, which was led by SoftBank’s Vision Fund 2, valued the firm at $45.6bn.
It is now seeking to secure up to $1bn from new and existing backers, according to the sources. The deal could value the firm in the low $30bn range following the money infusion.
A source divulged that Klarna’s recent talks with investors to pull up its valuation to over $50bn fell apart after some refused amid market turmoil.
Goldman Sachs is said to be pitching investors on Klarna’s upcoming financial round, whose timing and potential participants are unknown.
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There is also always a risk that a deal doesn’t happen, the report said.
Klarna was valued at nearly $3.5bn in 2019. The firm’s valuation jumped tremendously over several fundraising rounds during the pandemic.
Klarna’s net loss widened to $705.7m last year and its credit losses rose as the company expanded its consumer base and geographical footprint.
The news comes as several tech companies are pushing to raise funds, despite difficult market conditions, in a bid to roll out new offerings and expand globally.
In addition, BNPL firms are facing increasing competition from traditional financial institutions and strong scrutiny from regulators. Recently, a number of traditional institutions, including Barclays and PayPal, expanded their presence in the BNPL space.