Swedish payment solutions provider Klarna reported raising $800 million in new financing, but its market valuation has dropped by 85% from the $46 billion it demanded a year ago.
As investor interest in rapidly expanding tech ventures that have not yet achieved profitability diminishes substantially, Klarna said that the most recent round of fundraising valued the company at $6.7 billion, or 85% less than a year earlier.
According to the Swedish group, there had been a significant market sell-off, and Klarna’s competitors’ valuations had fallen by 80 to 90%.
“Klarna has not been immune to the significant downdrafts of fintech stock in public markets,” it said.
The $800 million raised in fresh funding will “primarily be used to expand Klarna’s leading market position in the United States,” it said.
Klarna blamed its falling valuation on “the worst set of circumstances to afflict stock markets since World War II,” pointing to high inflation, rising interest rates, lingering effects of the pandemic, supply chain disruptions and “the dislocations caused by the war in Ukraine.”
The business had already been affected by the economy’s deterioration when Klarna revealed in late May that it was laying off roughly 10% of its 7,000-strong workforce.
Since its 2005 launch, Klarna has become one of Sweden’s most well-known startups, providing consumers and businesses with simple online payment choices.
According to Klarna, it has 147 million active consumers across more than 400,000 merchants in 45 countries.