Buy now, pay later (BNPL) firm Klarna is preparing to raise new funds in a weak environment, a move that has reduced its valuation to roughly $6.5 billion, the Wall Street Journal reported Friday (July 1).
That number represents a significant retreat for the company, which was valued at $45.6 billion as recently as last year, the report said.
Sources familiar with the matter told WSJ the Swedish company is attempting to raise about $650 million, mostly from existing investors — including Sequoia Capital — noting that the final figures are far from settled and could change.
As recently as two weeks ago, Klarna was tabbed with a $15 billion valuation, which itself was a drop in value from the $30 billion level the company was pegged at in May. At the time, a company spokesperson told PYMNTS those valuations were just rumors.
However, the recent economic downturn saw Klarna lose 2.57 billion Swedish krona — or $250 million — earlier this year, leading the company to announce plans to lay off 10% of its staff.
Last week, Klarna said it was disputing new research into the BNPL industry by Barclays with debt charity StepChange that warns many people who could fall into financial peril due to unregulated financial products.
Barclays called on retailers to better examine BNPL offerings since most installment lending happens during the checkout process. The bank argued many retailers don’t fully understand the credit options they offer customers.
Klarna’s U.K. boss Alex Marsh said Barclay’s was attempting to subtly tout its own loan installment product, and called the report “hugely patronizing.”
“It is mind-boggling and frankly irresponsible in a cost of living crisis, that Barclays should use StepChange to endorse their high-cost installment credit product which charges 10.9% interest and to lobby against interest-free and manageable Buy Now Pay Later products,” Marsh told UK Tech News.
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