Mayowa is a crypto enthusiast/writer whose conversational character is quite evident in his style of writing. He strongly believes in the potential of digital assets and takes every opportunity to reiterate this. He's a reader, a researcher, an astute speaker, and also a budding entrepreneur. Away from crypto however, Mayowa's fancied distractions include soccer or discussing world politics.
Not so long ago Klarna was planning to raise $1 billion, which would bring its valuation to a 30 billion range.
Tech funds are certainly not what they used to be anymore, and top European fintech firms like Klarna are particularly feeling the impact of the current economic conditions. According to a recent report by The Wall Street Journal (WSJ), Klarna is looking to raise more funds. However, the funds will be significantly lower than what it raised last year. If the WSJ reports are anything to go by, then the fundraise could see the valuation of Klarna drop to around $15 billion. And that is a far cry from what the firm had earlier projected.
Just last month, Klarna was planning to raise $1 billion, which would bring its valuation to a 30 billion range. But from all indications, that is no more feasible. The company’s current talks with investors is likely ending with $500 million. This is despite raising $650 million almost 2 years ago in a funding round that was led by SoftBank.
Interestingly enough, the $500 million fundraise would mean that Klarna is no longer the most valuable fintech in Europe.
The news also comes at a time when the firm has revealed its plans to cut down its workforce by about 10%. Although layoffs have been trending in fintech and most industries amid unfavourable economic conditions.
Meanwhile Klarna now faces a lot of competition from other tech firms foraying into the buy-now-pay-later (BNPL) sector. In fact, not just tech firms, but big competitive firms like Apple. Earlier in June, Apple announced its move into the sector via Apple Pay.
But the interest of these technology firms did not just come on a platter. There has been a similarly increased interest from venture capitalists. So, the influx of more tech firms into the sector may be understandable.
Meanwhile, regulators are also now keeping a close eye on the BNPL space. With an increasing amount of consumer debts, a House Subcommittee on Financial Services convened a hearing on the case sometime last November.
Hopefully, regulators will come up with changes to check BNPL lending rules.