The valuation of Klarna Bank is set to plunge to $15 billion as the buy-now, pay-later (BNPL) player seeks a $500 million fund raise, according to a report from the Wall Street Journal.
This means that the company, known for a BNPL checkout option through which users are able to delay or split payments interest-free, would no longer be Europe's most valuable fintech. Its new valuation would be more than $30 billion less than at this time last year, when it raised $639 million in a round led by SoftBank.
Klarna's current talks with investors are also a come-down from previous fundraising ambitions, when it reportedly was set to raise $1 billion at a $30 billion valuation.
News of the down-round comes amid an employee cull at the company as it suffers during an economic downturn where investors are less willing to make bets on unprofitable companies. Last month, The Block reported that Klarna would dismiss about 10% of its workforce, citing a potential recession, higher inflation and a shift in consumer sentiment.
Klarna also faces increased competition in the sector, particularly from big technology companies. Earlier this month, Apple announced a foray into BNPL via Apple Pay.
As The Block has reported, an increasing number of financial technology firms have carved out market share in BNPL services, buoyed by interest from venture capitalists. Some of these companies are also exploring crypto offers as part of bids to cater to younger customers.
© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.