Klarna: $460 Million Funding, $5.5 Billion Valuation, 1 Million Daily Transactions

By Amit Chowdhry ● August 9, 2019
  • Klarna, a leading global disruptor of payments and banking, announced it raised $460 million at a post-money valuation of $5.5 billion

Klarna — a leading global disruptor of payments and banking and provider of smooth retail services — recently announced it raised $460 million in an equity funding round with a post-money valuation of $5.5 billion. This round of funding was led by Dragoneer Investment Group. Commonwealth Bank of Australia, HMI Capital LLC, Merian Chrysalis Investment Company Limited, Första AP-Fonden (AP1), IPGL, IVP, and funds and accounts managed by BlackRock also joined the round.

With the participation of the Commonwealth Bank of Australia, Klarna also agreed to establish an exclusive partnership for the Australian and New Zealand markets. And this investment follows a funding round in April of this year that closed above $100 million.

The funding will enable Klarna to continue its rapid rise in the US market where it is growing at an annual rate of 6 million new US consumers. And the valuation ranks Klarna as one of the largest fintech companies in Europe and one of the largest private fintechs globally.

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Klarna provides a healthier, simpler, and smarter alternative to credit cards along with the addition of multiple services to smoothen the shopping experience, online and offline. These services have been resonating with US consumers. This is also impressive as consumers are turning away from revolving credit lines towards alternative and more flexible financing alternatives.

“This is a decisive time in the history of retail banking. Finally, transparency, technology, and creativity will serve the consumer, and there will be no more room for unimaginative products, non-transparent terms of use or lack of genuine care of one’s customers. We, all 2500 of us at Klarna, are humbled and honored, and now also further empowered, to play a role in this improvement of an industry for the benefit of the consumer, worldwide and in the US in particular,” said Klarna co-founder and CEO Sebastian Siemiatkowski in a statement.

Klarna’s recently launched shopping app allows users to shop with Klarna at any store or brand online has been received very positively, with now more than 50% of the app users purchasing each week. Plus Klarna has also seen a surge in merchant demand for its services. Now the company is powering 3,000 merchants in the US including rue21, ASOS, Lulus, Toms, Superdry, Sonos, and Acne Studios — which helps them increase new consumer acquisition, average order value, and retention.

“Our strategy is to partner with a small number of disruptive, growth companies that are highly differentiated and run by world-class management teams. Sebastian and the Klarna team have built an exceptional payments business with a global footprint, operating in a huge addressable market with strong tailwinds,” added Dragoneer founder Marc Stad.

The business results have been strong and merchants who are offering “Pay in 4” are reporting a 68% increase in average order value, a 44% increase in conversion compared to cards and 21% higher purchase frequency.

Global brands such as H&M,  Abercrombie & Fitch, and Boohoo Group are soon going live with Klarna and there are currently more than a 1,000 merchants integrating with Klarna with a combined volume of $10 billion. The momentum of acquisition continues and in July a record number of new merchants signed with Klarna in the US.
Now Klarna is serving over 60 million consumers, 130,000 merchants partners, 1 million transactions daily and is in sight of a $1 billion annual revenue.

“Klarna has built a highly-impressive, digital payment ecosystem, trusted by both retailers and consumers. By simplifying and improving the flexibility of the payments process, retail partners working with Klarna have seen considerable improvement in customer engagement and sales. Klarna is one of Europe’s great fintech success stories and the company continues to develop truly innovative payment solutions. This latest funding round will enable the company to execute on its ambitious international growth plans,” explained Richard Watts of Merian Chrysalis Investment Company.