SoftBank Leads $640 Million Investment in Klarna, Valuing Firm at $46 billion

LONDON — Swedish fintech firm Klarna said Thursday that it raised $639 million in a new funding round led by SoftBank, valuing the company at $45.6 billion.

Klarna  is one of the largest providers of “buy-now-pay-later” services, which  let people finance their shopping purchases interest-free over a period  of monthly instalments. These services have become particularly popular  since the coronavirus pandemic began.

The  latest investment in Klarna, which was led by SoftBank’s Vision Fund 2,  cements its status as Europe’s top fintech unicorn, and the  second-biggest fintech start-up by valuation after Stripe. Adit Ventures, Honeycomb Asset Management and WestCap Group also invested, Klarna said.

“Consumers  continue to reject interest-and fee-laden revolving credit and are  moving toward debit while simultaneously seeking retail experiences that  better meet their needs,” Sebastian Siemiatkowski, Klarna’s founder and  CEO, said in a statement Thursday.

“More transparent and convenient alternatives align with evolving  global consumer preferences and drive worldwide growth,” he added.

Klarna,  a regulated bank, touts itself as an alternative to credit cards, an  industry the company views as detrimental to consumers. But it has faced  growing scrutiny in the U.K., where the government is calling for new rules to bring regulatory oversight to the buy-now-pay-later sector.

Klarna  makes money by taking a fee from merchants each time a customer makes a  transaction. It says merchants that use its service often see an  increase in sales as a result. The company’s competitors include  Australia’s Afterpay and Affirm, the American fintech firm from PayPal co-founder Max Levchin.

Klarna  posted record annual revenue of $1.2 billion in 2020. However, losses  also climbed 50% to about $109.2 million due to increased costs  associated with its international expansion.

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