Billions wiped from buy-now-pay-later giant Klarna as tech investors head for the hills

Klarna’s valuation has fallen 85 per cent to less than £6bn as investor enthusiasm for technology companies continues to wane.

The buy-now-pay-later (BNPL) business, once Europe’s most valuable private fintech company, has raised £673m of new money in its latest funding round.

But the investment valued Sweden’s Klarna at just £5.6bn – well below the £38.3bn valuation it reached last June.

Tougher times: Klarna, founded by Sebastian Siemiatkowski (pictured with wife Nina), saw its valuation slashed by 85% to less than £6bn.

The sharp drop in value comes at a time when investors are turning away from trendy tech companies, with Michael Moritz, Klarna’s chairman, blaming “investors who are suddenly voting differently than they have been voting for the past few years”.

The latest round of funding was backed by existing investors including Sequoia, Bestseller, Silver Lake and Commonwealth Bank of Australia.

New investors included the United Arab Emirates’ sovereign wealth fund Mubadala Investment Company and the Canadian Pension Plan Investment Board.

Klarna founder Sebastian Semyatkowski, 40, said it was a “testament to the strength” of the business that it was able to push through the funding round despite the chaos caused by Covid, Russia’s war against Ukraine and the resulting cost-of-living crisis.

Those factors, along with concerns that the global economy could be in for a rough ride in the coming years, have fueled excitement among tech investors.

Shares of companies such as Facebook, Tesla and Amazon have plummeted in recent months.

They were highly valued before the pandemic began because investors expected them to perform well in the future.

But those expectations are falling amid falling consumer spending and fears that some major economies could be on the brink of recession.

If consumers continue to tighten their belts and struggle to repay their BNPL debts, it could prove disastrous for suppliers like Klarna, who do not charge interest or late fees.

The lower estimate would be a blow to Siemiatkowski, who is ranked 951st on the Forbes Billionaires Index and has a fortune of £2.7 billion.

Klarna, once Europe's most valuable private fintech company, has raised £673 million in new funding in its latest funding round

Klarna, once Europe’s most valuable private fintech company, has raised £673 million in new funding in its latest funding round

He founded Klarna during business school in the early 2000s with his friends Niklas Adalbert and Viktor Jacobson.

It has been considering an IPO on the London Stock Exchange and told the Mail last year that it was weighing up the London and New York markets.

But a lower valuation could put a stop to those plans, with Klarna’s valuation, although down significantly from last year, still three times higher than it was in 2018.

The company wanted to point out that its peers have also fallen in value by 80-90 percent from their peak.

Moritz, who is also a partner at Sequoia, added: “Ultimately, after investors come out of their bunkers, Klarna and other top-tier stocks will get the attention they deserve.”


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