Not Even "Down Rounds" Can Stop the BNPL Machine

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Number of the Week: -19% (explanation below)

Not Even "Down Rounds" Can Stop the BNPL Machine

With every passing checkout charge, the Buy Now, Pay Later (BNPL) market seems to be simultaneously imploding and becoming more competitive. On Thursday, the Wall Street Journal broke the news that Klarna—the Sweden-based global leader in firms that specialize in BNPL—“is seeking to raise new funds that could value the fintech giant at almost a third less than the roughly $46 billion valuation it achieved just under a year ago.” The Journal was charitable in its interpretation; after all, “down rounds,” or fundraising cycles in which companies raise new capital at a lower valuation than a previous round, are something of a startup nightmare, a signal that something has gone wrong. A down round need not be fatal: Square and Draft Kings both pushed through down rounds, and given recent market tumult, down rounds are likely to become more common.

Still, it’s impossible to avoid the conclusion that investors don’t see BNPL as the Shangri-La of even a few months ago.