- Venture Daily
- Posts
- Klarna Angling for an IPO
Klarna Angling for an IPO
The buy now, pay later startup is making moves that indicate it is eyeing a debut in the public market.
Jackson Fordyce
November 07, 2023
Recommended: Listen to this story (06:42 - 13:51):
 |  |
The Story: After a tumultuous response to recent IPOs, prospective companies would be best to sit on their hands and wait for markets to improve. Right? Well, Klarna, the European-based buy now, pay later company doesn’t seem to agree. It has begun to take operational measures to position itself for a public market listing.
In a move indicating Klarna is eyeing the public market, it has established a new holding company in the U.K. According to a Klarna spokesperson, the holding company is confirmed and has been approved by Klarna’s largest backers, including Sequoia and Heartland.
And IPO discussions aren’t new for the company. When asked on a timeline for a public listing in August, co-founder and CEO Sebastian Siemiatkowski, explained that “from an IPO perspective, the requirements have been met…So now, it’s more market conditions… We don’t have any official date; we haven’t announced anything.” And then on Monday, he said Klarna “achieved exactly what we set out to do.”
The Swedish fintech reported its first quarterly profit in four years generating over $8.5 million dollars in Q3. Despite its first ever reported profit, Klarna has seen its valuation slashed by 85% in recent years.
In 2021, the company’s fundraising valued it at a whopping $46 billion dollars. In its most recent fundraise, the company dropped to a valuation of $6.7 billion. This came after Klarna had to cut a tenth of its workforce.
It appears Klarna is now angling for an IPO. Will it be the next victim of poor market conditions, or will the buy now, pay later startup soar, signaling a new dawn for the public market?
The Expert Take: Bob Rosin, partner at defy.vc, offers a reminder that companies can’t just wait forever for public markets to become more favorable. He says:
“Look, at some point these companies do need to go public. There’s a huge backlog of companies that really are ripe and are ready to be public companies, and in a normal market environment, they would be public now. If you look at Klarna, they were founded in 2005. We’re talking about a company that was started eighteen years ago… I’m sure both the investors and the team are looking for some liquidity.”
Rosin thinks Klarna’s ability to finally report profits will help it be a more alluring bet for investors: “The public markets are interested in businesses that are sustainable and profitable.”
*Stay informed about the three biggest stories in venture capital and tech news every weekday morning. 2-min reads only.
Reply