Klarna Bank is in talks to raise new equity at a valuation as low as $6 billion, a fraction of the $45.6 billion it commanded last summer as it became Europe’s most valuable startup, according to people with knowledge of the matter.
The buy now/pay later giant is in talks with investors about the new funding round, said some of the people, asking not to be identified discussing a private matter. The $6 billion figure is drastically lower than the $15 billion mark reported as being negotiated last month.
Employees may be granted new equity options at the lower valuation, as the majority of existing options bear no value. Klarna’s valuation discussions remain in flux and it’s possible the level could land closer to $10 billion, some of the people said.
A Klarna representative declined to comment, saying the company doesn’t discuss fundraising or valuation speculation. The Wall Street Journal earlier on Friday reported that the venture capital firm and backer Sequoia may lead a roughly $650 million round valuing Klarna at as low as $6.5 billion.
The Swedish lender, which offers buy now/pay later credit to more than 147 million global active users, posted an operating loss of 2.54 billion krona ($245 million) in the first quarter, and 6.58 billion krona last year. It has 400,000 retail partners, including Nike, Ikea, Sephora and Expedia Group, its website shows.
Klarna is led by Chief Executive Sebastian Siemiatkowski. Its backers include Dragoneer, Permira, SoftBank Group Corp.’s Vision Fund 2 and Silver Lake. The lender, which is regulated by the Swedish Financial Supervisory Authority, recently cut staff in an effort to curb costs.
A new valuation for Klarna would align with a correction in public markets just as a cocktail of inflation, higher rates and looming recession pressures its business model. Shares of rival Affirm Holdings have tumbled 75% in the past 12 months as investor sentiment on the buy now/pay later model has turned negative.
