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Klarna slashes valuation to $6.5 billion for fundraising round

Yahoo Finance's Allie Garfinkle discusses buy now, pay later company Klarna's latest fundraising round.

Video Transcript

RACHELLE AKUFFO: I want to shift gears, though, and talk about another tech company that's really feeling the pain right now, and that's Klarna. What do we need to know there?

ALLIE GARFINKLE: So Klarna is reporting raising-- reportedly raising money at a $6.5 billion valuation, Rachelle, and the important-- that sounds like a lot, but it's important to remember, in 2021, the company was valued at $45.6 billion. So that is a massive cut. There are some big-name investors in the company too, like Sequoia, so it's really a massive disappointment for them.

And there are two big reasons. The first is that the VC landscape has just so tightened. The bar for investment has gone up by so much. And I think how people are thinking about growth has changed. Klarna is raising a down round in the end, which is so rare, and it's a testament to how difficult the startup landscape and tech are right now.