Klarna raises new funds at a reduced value of $6.5 billion

Klarna Bank AB is on the verge of a deal to raise around $6.5 billion worth of new money in what people familiar with the matter say is a humiliating descent and proof of it the punitive environment for startup companies.

The Sweden-based specialty lending and online payments provider is in talks to raise about $650 million, primarily from existing investors led by Sequoia Capital, the people said. Michael Moritz, CEO of the well-known venture capital firm, holds the same position at Klarna.

The deal has yet to be finalized and could run into problems at the last minute, people said. But when completed it would mean a huge discount on the company’s valuation when investors buy from a subsidiary of SoftBank Group Corp. 9984 are led,
valued Klarna at $45.6 billion in June 2021.

Klarna’s core offering, known as Buy Now, Pay Later, is featured in online checkout sites for popular retailers such as Macy’s M,
and Bed Bath & Beyond BBBY,
Consumers use Klarna to split payments over time for things they order online.

Klarna competes directly with credit card companies, and some investors viewed the company as potentially the next PayPal Holdings Inc. PYPL,
or Block Inc. SQ,
Companies that have grown by stealing from businesses traditionally dominated by banks.

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Brian Lowry

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