Swedish fintech startup Klarna is reportedly close to securing a new round of funding that would value the company at more than $40 billion.
Klarna offers a buy-now-pay-later service to retailers and raised $1 billion in March at a valuation of $31 billion. The latest investment round is expected to be smaller but will secure the company’s status as the most valuable private technology unicorn in Europe.
According to anonymous sources quoted by Business Insider, Softbank and multiple other investors are backing the investment. This latest funding news will most likely be followed by a much-anticipated blockbuster public listing at some point in the future.
Just hours after the news of the funding broke, Klarna suffered a “self-inflicted incident” affecting the privacy of its users. Klarna CEO Sebastian Siemiatkowski announced the issue on Twitter, promoting concern the company had suffered a data breach. “Full attention from all colleagues to bring back things to normal, take actions to avoid this going forward and communicate broadly,” Siemiatkowski said on the social media platform.
Klarna posted $1.2 billion in annual revenue last year, crossing the $1 billion mark for the first time. It’s losses increased 50% due to international expansion costs, and the company reported a new loss of around $109 million. The startup received a boost during the coronavirus pandemic as more people have shopped online. Klarna takes a fee from merchants when customers make a transaction and is also a regulated bank. It has made efforts to move into retail banking in its native Sweden and Germany.
Other buy-now-pay-later services have also increased in popularity during the pandemic, perhaps partly due to the economic woe suffered by people who have lost their jobs. American payments company Stripe recently partnered with Afterpay to offer a pay now option at checkout, while PayPal launched a similar offering last year. However, some countries have not looked favorably on the rise of these services.
Regulators in the United Kingdom are looking to impose new rules on companies like Klarna over fears of unaffordable loans being pushed on customers.
