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Buy-Now, Pay-Later Giant Klarna raises $639 million




Klarna, a Swedish fintech giant specializing in buy-now, pay-later technology, announced today that they raised $639 million in funding. The funding round was led by SoftBank’s Vision Fund 2 and included well-known firms Silver Lake, China’s Ant Group, H&M, and Sequoia Capital. The most recent round of funding has raised Klarna's evaluation to $45.6bn, a significant jump up from their $31 billion evaluation in March 2021 and $11 billion from last September. This evaluation has solidified Klarna as the second most valuable private fintech in the world behind Stripe.

Credit Card Alternative

Klarna provides customers of major retailers like H&M and Sephora with the option to buy now, pay later. Through this service, customers have the ability to split up purchases into four equal payments. On these purchases, clients are provided with a one-time card. Each time you create a one-time card with Klarna, you will be given a unique card number that you can use in the checkout of the store, like any regular credit card. Each one-time card then follows the selected payment plan, which can be paid and managed through the website or mobile application. The card can be connected to either your credit or debit card. The main benefit of having these one-time cards is the ability to automatically make payments on set dates. According to data gathered by Klarna, 44 percent of customers would have abandoned a purchase if the four payment option was unavailable, and 45 percent of customers spend more on each order when the payment plan option is available. 

In return for the service, Klarna charges merchants a fee on each transaction. The company has had major success in Europe, with 87 million active users and posted annual revenues of $1.2 billion in 2020. While Klarna dominates the pay-now, buy-later market in Europe, major competitors in other regions include Australia’s Afterpay and American fintech Affirm.

Expansion into the United States

With this recent round of funding, the company has plans to aggressively expand across the world, particularly targeting the United States. The company had 14 million users in the United States at the end of 2020, with 60,000 average daily downloads logged in December of 2020. The company has noted that they see an overuse of credit cards in the United States, and believe there is a desire from millennials for this type of technology. Another benefit the company currently sees in the United States is a more relaxed regulatory system. In the U.K, the company has faced scrutiny from regulators and a February decision by the U.K. Treasury has brought oversight of the buy-now, pay-later sector under the jurisdiction of the Financial Conduct Authority (FCA). The company has recently been eyeing an IPO sometime in the future on the London Stock Exchange, but the increased focus on expansion into the United States may result in the company also considering U.S-based exchanges.



Baggio has been an investor in the technology space for over half a decade. He uses the perspectives gained from his work experience in the private, public, and non-profit sectors to guide his investment strategy, with a specific interest in the potential of emerging disruptive technologies.