By Daniel Lanyon on Friday 20 May 2022
The ‘buy-now-pay-later’ giant last raised cash almost exactly 12 months ago when market sentiment was pointedly different to today’s volatile conditions.
Europe’s most valuable fintech company Klarna is facing a c.30 per cent cut in an ongoing funding round aimed at raising $1bn, according to media reports.
In contrast to other reports from the start of the year, when the ‘buy now, pay later’ giant was said to be courting sovereign wealth and pension funds as new investors at a valuation between $50-60bn.
The Swedish company last raised cash in June of 2021 at a $45.6bn valuation, and previous to this at a $10.6bn valuation in September of 2020
Owing to explosive growth in the BNPL market during the pandemic as well as rapid geographical expansion, Klarna has scaled to 150 million global customers
Recent stock market turmoil that has particularly affected newer and highly valued tech businesses such as Klarna-rival Affirm, which saw its stock price plunge 85 per cent from a November 2021 high, is beginning to affect valuations in the private market.
This, as first reported by The Wall Street Journal, will mean venture capital investors are seeking a discount on Klarna’s equity relative to its last round of funding which included the likes of SoftBank’s Vision Fund 2.
Chrysalis Investments, a UK-listed venture fund with a large stake in Klarna has seen its net asset value largely reflect this new valuation, according to analysts at investment bank Liberum.
“Based on recent NAV updates, we estimate Chrysalis has reduced the valuation of its holding in Klarna by c.27 per cent. The company reported a "modest" reduction in the position in the December NAV and the interim NAV announcement for 21 March 2022 is also likely to have included a further writedown,” said Liberum.
Klarna represented 23.8 per cent of Chrysalis' NAV at 18 February 2022.
“The majority of the writedown implied by the latest funding round should already be reflected in Chrysalis' NAV. We estimate the reported funding round valuation implies a 2022 EV/sales multiple of 11x-12x for Klarna assuming growth rates are maintained,” Liberum addd.
A spokesman for Klarna declined to comment.
