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Klarna Faces Valuation Drop to $30 Billion as Seeks Funding

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(Bloomberg) -- Klarna Bank AB is looking to tap investors for more cash in a move that would reduce its valuation by about a third, according to people familiar with the matter.

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The Swedish fintech company, which was valued at $46 billion last June, would be worth about $30 billion under its latest plans, said the people, who asked not to be named because the process isn’t public.

Klarna is seeking about $1 billion in its new funding round, according to the Wall Street Journal, which reported the plan earlier. In February, Bloomberg News reported that Klarna was exploring a valuation of about $50 billion to $60 billion with funding from new and existing investors.

The company, which offers buy-now-pay-later credit to shoppers, now operates in 20 markets globally, though its yearly operating losses have almost doubled in 2021 to $487 million. Investors include SoftBank Group Corp., Sequoia Capital and Permira and its 2021 fundraising made it Europe’s most valuable startup.

Still, offering online shoppers the option to pay in installments has come under increasing scrutiny from regulators. The UK said last year it will start regulating the interest-free buy-now, pay-later sector as its popularity soars. This month, the Swedish Authority for Privacy Protection said it had launched an investigation into the payments firm’s checkout service.

The stock market drop in early May has combined with the continued crises of the Ukraine war, surging inflation, and a pandemic now well into its third year to cause significant pain at startups around the world. Globally, fundraising has slowed, with the number of megarounds ($100 million or more) and the total amount raised declining in the first quarter, the first time that’s happened in almost two years.

This quarter, the number of tech companies going public is set to be the lowest since 2016, according to researcher CB Insights. Shareholders in high-flying private tech companies such as Stripe Inc. and Instacart Inc. have marked down the value of their holdings, in some cases multiple times.

(Updates with context in last three paragraphs.)

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