FinTech: Klarna Gains More BNPL Muscle With $650M Mega Round

September 15, 2020 | FinTech, News, Venture Capital

Klarna now also ranks as the biggest fintech unicorn in Europe, and fourth globally, after the round valued it at $10.65 billion.

A team of marquee investors, led by Silver Lake, invested $650 million in Klarna, the payments and shopping service known for its “buy-now-pay-later” (BNPL) offering.

GIC – Singapore’s sovereign wealth fund – as well as funds and accounts managed by BlackRock (NYSE: BLK) and HMI Capital, Sequoia Capital, Dragoneer, Permira, Commonwealth Bank of Australia (ASX: CBA), Bestseller Group, and Ant Group participated in the mega-round. Furthermore, Merian Chrysalis, TCV, Northzone, and Bonnier acquired shares from existing shareholders. (PR Newswire)

According to the WSJ, Silver Lake itself will account for $500 million out of the total funding, buying a less than 5% stake.

Buy Now Pay Later

Klarna has become highly popular in the U.S. due to its buy-now-pay-later” (BNPL) product. Due to the economic difficulties from COVID-19, many shoppers had overdrawn their accounts and credit cards and BNPL services were a fee-free and interest-free alternative.

BNPL lets you buy now and pay later over three or four installments with zero interest.

Besides, the pandemic has pushed more and more customers towards online shopping. It’s a safer alternative to physical shopping at malls and stores.

Klarna’s shopping app now has more than 12 million monthly active users worldwide, with 55,000 daily downloads.

To give a further boost to its BNPL product, Klarna has now introduced in the U.S. the world’s first buy-now-pay-later shopper loyalty program, Vibe, which rewards consumers who pay on time.

“We are at a true inflection point in both retail and finance,” said Sebastian Siemiatkowski, co-founder and CEO of Klarna in a statement. “The shift to online retail is now truly supercharged and there is a very tangible change in the behavior of consumers who are now actively seeking services which offer convenience, flexibility, and control in how they pay and an overall superior shopping experience.”

Use of funds

Klarna will use the funds from the latest round to grow its United States market and for developing the company’s products for merchants and customers.

According to BloombergQuint, Klarna intends to go for an IPO in the future. Siemiatkowski referred to the IPO as a “natural evolution.”

Related Story:  BNPL Biggie Klarna Could Value At $10B In Last Fundraise Before IPO

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