Klarna raises $800 million as valuation plunges 85% in a year

By Supantha Mukherjee

STOCKHOLM (Reuters) -Swedish payments firm Klarna Bank AB said on Monday it had raised $800 million of funds at a valuation of $6.7 billion, down around 85% from the $46 billion price-tag it attracted last year.

The tough stance taken by funders comes amid a drop-off in investor interest in fast-growing tech ventures that have yet to turn a profit and are burning through their cash reserves.

One of the beneficiaries of increased online shopping driven by the pandemic, Klarna, which provides "buy now, pay later" (BNPL) services, went on to become Europe's most valuable startup from a valuation of $5.5 billion in 2019.

But valuations have tumbled this year in a broad stock market sell-off, and several major tech stocks have been battered in recent months. BNPL rival Affirm Holdings Inc has shed more than 80% of its value this year alone.

Klarna said its peers were down 80-90% from peak valuations and so its own decline since June 2021 was on par with them.

To rein in costs, Klarna made about 10% of its workforce redundant in May, saying rampant inflation and the war in Ukraine had worsened business sentiment.

Several media reports documented Klarna's struggle to attract new funds, with its valuation steadily decreasing as it engaged with investors.

"The shift in Klarna's valuation is entirely due to investors suddenly voting in the opposite manner to the way they voted for the past few years," Michael Moritz, partner at venture capital firm Sequoia, said in a statement.

Sequoia, the company's founders, Bestseller, Silver Lake, and Commonwealth Bank of Australia were among existing investors to participate in the round.

Klarna also got new investors such as Mubadala Investment Company and Canada Pension Plan Investment Board.

(Reporting by Supantha Mukherjee in StockholmEditing by Helena Soderpalm and Mark Potter)