Klarna is far from the only BNPL service to be feeling the heat right now.
👉 Background: Klarna was the OG buy now pay later company. It launched even before Afterpay way back in 2005. It has become a big name in the BNPL world - we're talking 147 global active users across 45 countries.
👉 What happened: Klarna has also become a big name in the investment world. They have raised over $3.7 billion US over 32 funding rounds. The last funding round meant Klarna was worth a whopping $45.6 billion USD.
👉 What else: Now, Klarna's raising capital again, but given the performance of other BNPLs, they're looking to raise at a valuation in the low $30 billions... AKA a 'down round'.
💡 A down round happens when a private company like Klarna raises capital at a lower valuation than its previous capital raise.
💡 Companies hope that each new funding round closes at a higher valuation. BUT the reality is, the actual valuation of a company is subject to many different factors, like:
💡Just this year, we've seen Klarna's competitor Affirm drop its share price by $74, and Zip's has plummeted by 78%, so it's no surprise that Klarna is facing a down round.
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