Klarna To Raise Fresh Cash at Slashed $6.5 Billion Valuation (wsj.com) 10
Klarna Bank is nearing a deal to raise new money at a valuation of around $6.5 billion, WSJ reported Friday, citing people familiar with the matter, a humbling comedown and a testament to the punishing environment facing startup companies. From a report: The Sweden-based specialty lending and online payments provider is negotiating to raise about $650 million mostly from existing investors led by Sequoia Capital, the people said. Michael Moritz, who is the chairman of the well-known venture-capital firm, serves in the same role at Klarna. The deal has yet to be completed and could still hit last minute snags, the people said. But if completed, it would represent a huge discount on the company's valuation when investors led by an arm of SoftBank Group valued Klarna at $45.6 billion in June 2021.
Exploiting the uninformed (Score:1)
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No so fast, if klarna goes busr, the debt will be baught for cents on the euro, and the new depr holders will do evryrhing within the law to recover the money
This assumes someone is daft enough to buy the toxic debt. In the EU there are rules about how much you can chase someone for debt. Usually involving getting a court order and at that point you're never going to get 100% of what you're owed, let alone have spent chasing it back.
That being said, I'd never recommend trying to use this method to defraud a failing company as you'll still screw your credit record in the process regardless of if you end up having to pay it back and no-one will lend to you in t
The question is why they need more investments? (Score:2)
They have been well establishes in several European markets, so what is wrong with their business model if it still does not provide enough profit to make traditional financing a viable option?
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Not much profit to be had when the people at the top are skimming off everything for themselves.
Re: The question is why they need more investments (Score:2)
If I was in Sequoia Capital, I'd bail now.
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Their model is a form of micro-lending that is not classified as credit in most jurisdictions. It still relies heavily on interest rates being low, so the recent macro economic shifts raising interests rates have made their model considerably worse. Also, to the extent that inflation lowers consumer confidence, that is also hurting their business in the form of fewer overall transactions.
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In addition to this, their microlending scheme works over what is often borderline illegal or illegal data gathering and banking information collection, as they also offer a full payment method suite for internet shops which does the collection of data even if you pay via credit card or SEPA in some cases.
Here in Finland they had several legal problems with their methods.
There's now a sizable "if Klarna is the only payment option, I'm not buying" movement as a result, and I know of quite a few internet shop
So... (Score:2)
how tragic that a company I've never freaking heard of has been "slashed" to a mere $6.5B valuation!
Re:So... [feel good] (Score:2)
I still count it as a feel good story. I always enjoy watching rich gamblers lose big.
Substance? I don't actually care what they were gambling on. If I were a real comedian I'm sure the NFTs would fit in here somewhere. Maybe third mortgages on NFTs?