Klarna has seen its valuation rise 50 per cent to $45.6 billion after a recent round of funding led by Japanese company SoftBank, making it Europe’s most valuable fintech company.
The Swedish buy-now-pay-later (BNPL) company watched its valuation rise to $31 billion in March after being previously valued at $11 billion in September 2020.
SoftBank’s $639 million Vision Fund Two fundraising round sees the company join previous investors H&M and Sequoia Capital, the latter of which recently invested in luxury fashion brand Ssense.
Vision Fund One was largely funded by money from the Middle East, however the more recent round is made up of investment purely from the Japanese investment group.
The new valuation comes before a highly anticipated initial public offering (IPO) in the next few years for the fintech company.
“Klarna’s growth is founded on a deep understanding of how the purchasing behaviours of consumers are changing, an evolution which we believe is accelerating,” SoftBank managing partner Yanni Pipilis told the Financial Times.
READ MORE: UK Klarna shoppers can now use its BNPL service on any online store regardless of partnerships
The Swedish company has seen the volume of payments processed in the US jump by over 295 per cent in its fourth quarter.
Klarna bosses told investors that its US business operations would soon be “multiple times larger than our current business today” due to a movement in millennial relying more on debit cards and their overuse of credit cards in documents shared with the Financial Times.
By Swedish legislation, Klarna is regulated as a bank however views itself as a “super app” which includes capabilities of browsing for shopping and retail banking besides its BNPL feature which it is more commonly known for.
While the BNPL space is growing in popularity, companies such as Klarna and its rival Clearpay are facing a wave of scrutiny and possible regulation clampdowns as worries mount over whether their services push consumers to purchase more than they can afford.
SoftBank’s investment round sees Klarna’s valuation overtake that of music streaming service Spotify and leaves it within touching distance of the Nordics’ largest bank, Nordea.