Swedish buy, now pay later (BNPL) platform Klarna is now valued at $31 billion after raising $1 billion from new and existing investors.
Klarna CEO Sebastian Siemiatkowski said in a Monday (March 1) press release that the company is looking to tackle bigger issues beyond the current financial service products it offers shoppers and merchants.
Amid a “culture of change, disruption and innovation,” he said, “I believe our industry has a responsibility to help in some way solve global sustainability issues and I hope others will join Klarna in our ambition.”
Klarna is pledging 1 percent of the capital raised to a newly created global sustainability initiative that will launch April 22, World Earth Day.
The new equity funding round makes Klarna the highest-valued private FinTech in Europe and the second-highest worldwide, the company said, citing research from CBinsights.
Klarna said retail payments volume in 2020 escalated 46 percent to reach over $53 billion. Revenue in the same year expanded by 40 percent year-on-year to $1 billion.
The new funding gives the company “additional firepower” that could be tapped for possible mergers and acquisitions (M&As), Siemiatkowski told the Financial Times.
“There are some great start-ups out there that don’t have the distribution power, the 90 million users that Klarna does. We do believe this is going to be a transformative time for retail banking and payments, and we want to serve our customers with as much value as we can so if we see such opportunities it could be very interesting,” he told the publication.
The company’s 2020 operating income was $1.1 billion on a net loss of $160 million due to its expansion into the U.S.
“We are in this trillion-dollar market called credit cards, retail banking and payments. Even if it’s this high valuation, we’re still a fraction of this industry. It’s really exciting because it’s not an industry that has put customers first. There is no reason why Klarna couldn’t be worth a lot more than it is currently,” Siemiatkowski told FT.
The company was valued at $11 billion in September 2020 and $5.5 billion in August 2019, per the Financial Times.
Klarna said last month that it was looking to raise $800 million to $1 billion for a valuation of $31 billion. The company reported a 2020 gross merchandise volume of $53 million.
Regulating the BNPL industry will take time, Klarna said, and credit reporting agencies need to get the necessary infrastructure to enable data sharing for its products and services.
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