Klarna rival Zilch is assembling a new funding round, according to sources familiar with the matter speaking exclusively with Verdict.

The buy-now-pay-later (BNPL) business’ upcoming cash injection will see the company raise additional funding which it will use to grow its customer base and services.

Sources declined to provide any confirmation about how much Zilch is raising, at what valuation or when the funding round may close.

The BNPL startup was founded in 2018. It closed a $80m Series B round in April at a $500m valuation. It extended the round in late July by adding another $110m to it.

Since then, Zilch has secured over one million customers and grown its team to just shy of 200 employees.

The BNPL space is growing increasingly competitive with raises in the hundreds of millions becoming commonplace over the past year.

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By GlobalData

Swedish BNPL giant Klarna became Europe’s most valuable tech company after securing a $45.6bn valuation on the back of a $639m SoftBank-led investment round in June. Italy’s Scalapay raised a $155m Series A funding round in September and big players like PayPal and Mastercard are also muscling into the sector. In short: the BNPL space is getting crowded.

The competition is understandable as the BNPL market is expected to be worth $166bn by 2023, according to GlobalData’s thematic research.

Zilch has, since raising its Series B round, been busy carving out a space for itself in the market, often suggesting that Klarna has copied its features.

Last week, Zilch’s founder and CEO Philip Belamant suggested that Klarna had drawn inspiration from Zilch for its “Pay Now” feature, saying it was very similar to Zilch’s own product. Klarna denied the allegation, saying it had already rolled out Pay Now in 14 other countries.

In June, Klarna’s new Shopping app made it’s UK debut, offering users access to BNPL services wherever they shop online.

At the time, Zilch’s CEO suggested that Klarna had imitated another Zilch solution. Klarna denied the suggestion.