Fundraising haul of $1 billion propels Klarna to a whopping $31 billion valuation
Klarna, the Swedish fintech company known for its Buy Now, Pay Later (BNPL) services, has been making waves in the global market. The company, which currently values at an impressive $31 billion, recently raised $1 billion in an equity funding round, making it the highest-valued private fintech in Europe and the second highest worldwide.
The funding will be used to fuel Klarna's global expansion, with the aim of working with retailers around the world. The company has already established a strong presence, boasting over 250,000 retailers in its network, including Sephora, Ralph Lauren, Urban Outfitters, Macy's, and many more. In the US alone, Klarna reached 7.85 million customers last year, a significant increase from its 3.5 million monthly active users.
Klarna's success can be attributed to its flexible options, offering consumers the ability to pay in 4, pay in 30 days, or opt for longer-term financing. This flexibility, combined with a large merchant base, sets Klarna apart from its main competitors, such as Affirm, Afterpay, Sezzle, PayPal Pay Later, and Splitit. Each of these competitors varies in terms of plan duration, interest charges, credit check requirements, merchant fees, and risk models.
Affirm, for example, offers short-term and longer-term installment plans, with interest rates varying by loan. Afterpay focuses on 4-installment, interest-free plans, but with higher merchant fees. Sezzle provides 4-installment interest-free payments with an option to build credit, while Splitit enables installment payments using existing credit cards without additional credit checks.
PayPal, another formidable competitor, debuted its own "Pay in 4" installment payment service in September, further intensifying the competition in the BNPL market. However, Klarna continues to distinguish itself with its wide array of offerings and global reach.
In a recent statement, Sebastian Siemiatkowski, co-founder and CEO of Klarna, emphasised the importance of transparent products that align with consumers' lifestyles. "Consumers want banking, shopping, and paying solutions that fit seamlessly into their lives," he said.
To cater to this demand, Klarna has introduced its own loyalty program and integrated its services within Google Pay. The company also added retailers like Rue21, Asos, Toms, GameStop, and Etsy to its roster, further expanding its reach.
With its continued growth and innovative offerings, Klarna is poised to remain a key player in the BNPL market. As the competition landscape remains robust, each provider will need to continue adapting to meet the evolving needs of both consumers and merchants.
[1] https://www.reuters.com/business/finance/klarna-raises-1-billion-funding-round-valued-31-billion-2021-09-09 [2] https://www.businessinsider.com/klarna-afterpay-companies-buy-now-pay-later-2021-9 [3] https://www.forbes.com/sites/jackkelly/2021/09/08/klarna-raises-1-billion-to-take-on-paypal-and-affirm-in-the-buy-now-pay-later-market/?sh=62e260c82b68 [5] https://www.cnbc.com/2021/09/08/klarna-raises-1-billion-in-funding-to-take-on-paypal-and-affirm-in-the-buy-now-pay-later-market.html
Space: Klarna, with its global expansion, aspires to work with retailers from all corners of the world, potentially including space-themed merchants or those offering products for space travel and exploration.
AI: To effectively adapt to the evolving needs of both consumers and merchants, Klarna may leverage AI and machine learning techniques to analyze consumer behavior, predict trends, and refine its products and services accordingly.
