Currently, in most cases, services that buy now and pay later do not affect an individual’s credit score.It is now set to change in the UK
Jakub Porzycki | NurPhoto | Getty Images
Klarna’s rating fell 85% in a new funding round announced Monday, reflecting the sentiment of tough investors surrounding high-growth tech stocks and “buy now, pay later” lenders. I saw.
A Swedish fintech company said it has raised $ 800 million in new funding from investors with a valuation of $ 6.7 billion. This is a significant reduction from the $ 45.6 billion value secured by the Japanese-led 2021 cash injection. Softbank..
Following weeks of speculation that Klarna was looking for a so-called downround, it raised capital at a lower valuation than when private companies last sold new shares to investors.
Sebastian Siemiatkowski, CEO of Klarna, tried to downplay the importance of the company’s downgrade on Monday, claiming the deal was “a testament to the strength of Klarna’s business.”
“With the global stock market plunging for more than 50 years, investors acknowledged our firm position and continued progress in revolutionizing the retail banking industry,” Siemiatkowski said in a statement Monday. Stated.
Klarna not only secured support from existing investors Sequoia and Silver Lake, but also raised additional investment from the Mubadala Investment Company in Abu Dhabi of the Canadian Pension Plan Investment Board in a round.
Klarna said it would use this money to continue its expansion in the United States. According to the company, there are currently a total of 30 million users in the United States.
Goldman Sachs The company added that he advised Klarna on some of the funds raised.
What’s next to buy now and pay later?
Klarna’s downround is a sign that the tech stock turmoil is worrisome to private market investors.
High-tech companies backed by many venture capital firms have seen their reputation decline for fear of an approaching recession. They have also taken a series of layoffs and other cost-cutting measures to appease clever investors.
Klarna itself reduced about 10% of the world’s workforce earlier this year.
This development is also a sign of problems in the BNPL market, buy now, pay later, or.
Klarna and AffirmAllows customers to spread their purchase costs evenly in installments each month, raising questions about the sustainability of their business model against the backdrop of rising inflation and rising interest rates.
they again, Many new entrants In space — including AppleAnnounced the launch of its own installment loan product in June.
Affirm’s share, which debuted in early 2021, has fallen by more than 77% since the beginning of the year.
PayPal and Square’s parent company Block, which recently acquired Australian BNPL company Afterpay, have declined 64% and 61%, respectively, over the same period.
In a series of tweets on Monday, Siemiatkowski said Klarna was “not immune” to the pressures faced by peers, and after recording significant losses as a result of aggressive international expansion, the company “revenues.” He said he was planning to “return to sex.”
According to Siemiatkowski, the fact that Klarna’s value is only slightly higher than $ 5.5 billion in mid-2019 has been “strange considering everything the company has achieved” ever since.
“Those that don’t kill you make you stronger,” he added.
