Swedish buy it now and pay later (BNPL) giant Klarna is trying to boost its previous valuation by a third, The Wall Street Journal reported on Friday, as economic conditions begin to bite.
This time last year, he raised a $639 million seed round $46 billion valuation led by SoftBank, making it the second most valuable startup in the world.
Now that valuation could shrink to $15 billion as Klarna is in talks with investors to raise at least $500 million, the Journal reports.
Last month, the Journal reported that Klarna was in talks with investors about a deal that would value the fintech at $30 billion and provide $1 billion in fresh capital. Investors clearly didn’t bite.
Just three weeks ago, Klarna CEO Sebastian Siemiatkowski announced that the company was dismiss 10% of its global workforce, citing market constraints.
He announced the layoffs to staff in a pre-recorded video message and said: “We are heavily influenced by the outside world. When we set our 2022 goals in the fall, it was a very different world than we have today.
“What we are seeing now in the world is neither temporary nor fleeting, and so we must act,” he added.
As many as 700 people are affected by the layoffs, indicating that even the region’s best-capitalized fintech is not immune to an economic downturn.
In the same week, Screened reported that the fintech had quietly announced that pre-tax losses had tripled to $250 million in the first three months of the year, from $80 million in the same period last year.
Buy now, pay later, startups like Klarna thrive in a low interest rate environment where it’s cheap to offer consumer credit at no or very little interest.
Over the past two years, this has meant that merchant fees and late payment fees have generated enough revenue – but their margins start to shrink when central banks raise rates.
A Klarna spokesperson told Sifted that the reports were “pure speculation and we do not comment on fundraising or valuation speculation.”
Amy O’Brien is Sifted’s fintech reporter. She is the author of Sifted’s fintech newsletter and tweets from @Amy_EOBrien.