Last month, we reported that Klarna is reportedly close to raising nearly $500M (approx €410.3M) in a new round of funding from a group of investors including SoftBank. On Thursday, the Swedish fintech giant confirmed a new equity funding of $639M (approx €524.4M) led by SoftBank’s Vision Fund 2, with additional participation from existing investors Adit Ventures, Honeycomb Asset Management and WestCap Group.
According to Klarna, the capital was raised to support international expansion and further capture global retail growth. With this development, the company is now valued at $45.6B (approx €37.42B) and claims to be the highest-valued private fintech in Europe and the second-highest worldwide.
Yanni Pipilis, managing partner for SoftBank Investment Advisers says, “Klarna’s growth is founded on a deep understanding of how the purchasing behaviors of consumers are changing, an evolution which we believe is accelerating. The company has already successfully expanded into the US and we are excited to continue supporting the team in bringing the next generation of financial services to new markets worldwide.”
Making online payments simple and safe
Founded in 2005 by Sebastian Siemiatkowski, Klarna is an e-commerce payment solutions platform for merchants and shoppers and is also a regulated bank known for its “buy now, pay later” model – offers shoppers interest-free financing on retail purchases over a period of instalments.
Additionally, consumers can also browse and shop any brand online with Klarna payment options, track spending and available balances, add favourite items to wishlists, access tailored discounts, receive price-drop notifications, track deliveries, and join Klarna’s new loyalty programme, Vibe.
Speaking on the fundraise, Sebastian Siemiatkowski, says, “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. Klarna’s more transparent and convenient alternatives align with evolving global consumer preferences and drive worldwide growth. I’m very proud of the investors who are supporting Klarna’s ambition to challenge these outdated models to empower consumers with fair, transparent, and convenient products to help them bank, shop and pay each day.”
The company’s app is being used by 18 million consumers globally and by over 250,000 retailers from around the world. Some of its retail partners include giants such as H&M, IKEA, Expedia Group, Samsung, ASOS, Peloton, Abercrombie & Fitch, Nike, and AliExpress.
Currently, the company employs more than 4,000 employees globally, 1,500 of which are focused on engineering.
The company has witnessed that its services are resonating with customers as the company generated $18.9B in Gross Merchandise Value in Q1 2021 as compared to $9.9B in Q1 2020.
Last year in 2020, the Klarna app claims to be consistently ranked among the Top 10 app downloads in the US and this momentum continues as downloads in 2021 have increased 125 per cent year on year, propelling record volumes in March 2021.
Klarna is live with 24 of the top 100 US retailers, more than any of its competitors. The company’s global footprint across 17 markets continues to grow, with a number of new markets launching in 2021 including France just this week, soon to be the largest e-commerce market in Europe worth over $185B by 2024.
Earlier this year, Klarna launched ‘GiveOne’ initiative to support planet health. And as part of this initiative, 1 per cent of the raised capital will be directed to initiatives supporting planet health.
Earier this month, US rapper A$AP Rocky invested in Klarna and said he will join the GiveOne sustainability initiative by pledging 1 per cent of his investment towards climate and biodiversity projects. Specifically, the rapper has selected the Miti Alliance in Kenya and its founder Michael Waiyaki, who is working to slow the impact of climate change which is due to deforestation. The impact from his contribution will be tracked on his behalf in the coming months and years.
Klarna has also launched a CO2 tracker on every purchase. 90 million Klarna consumers across all markets are now provided with the kgCO2 value on every purchase. The company has partnered with Doconomy, to help track and measure the carbon footprint, to provide shoppers with an average kgCO2 value for each purchase. The fintech company believes its own carbon footprint will be addressed through this new approach.
By 2030 the company aims to reduce company emissions by 50 per cent, and from 2021, it will make annual financial contributions to high-impact climate projects, including carbon removal, blue carbon initiatives, reforestation and forest protection, and high-impact emission reduction projects.