Buy now pay later outfit Klarna has has raised $460 million in an equity funding round, at a post money valuation of $5.5 billion.
The valuation ranks Klarna as the largest private fintech in Europe and as one of the largest private fintechs globally.
The funding will be used help the Swedish company to crack the US market, where it is currently growing at an annual rate of 6 million new US consumers, and to enter Australia and New Zealand with the backing of new investor Commonwealth Bank of Australia. CBA contributed $100 million to the investment round.
The vendor says consumers in the US are warming to its installment shopping app as an alternative to inflexible revolving credit lines.
Klarna has also seen a surge in merchant demand for its services. The company is now powering over 3000 merchants in the US — including rue21, ASOS, Lulus, Toms, Superdry, Sonos and Acne Studios.
The business results are strong, says the company, with merchants who are offering ‘Pay in 4’ installments reporting a 68% increase in average order value, a 44% increase in conversion compared to cards and 21% higher purchase frequency.
The funding round was led by San Francisco's Dragoneer Investment Group, in participation with CBA, HMI Capital, Merian Chrysalis Investment Company, Första AP-Fonden (AP1), IPGL, IVP and funds and accounts managed by BlackRock.
This investment follows a funding round in April of this year that closed above the company’s $100 million target, driven by strong demand from Klarna’s existing investor base.