The decline in public market valuations has filtered through to private companies too. Over the last couple of weeks, we’ve heard stories of household name fintech’s also feeling the crunch:
Klarna – once Europe’s most valuable privately owned tech company has just seen its valuation slashed by 85%. Following its recent $800 million funding round, Klarna reported a drop in valuation, from $46 billion to under $7 billion. In May, the firm announced its first large-scale job cutting exercise in which 10% of its headcount, 700 employees, were laid off. A number of roles including software engineer, product manager, analyst and UX researcher took the brunt of this scale-back. Why the plunge in valuation then? Simply, investors now are voting differently to how they did the last few years – well, that and a few changes to the “buy now, pay later” market, have made things increasingly difficult for them.
Stripe – the latest victim of tech cutbacks, has just revealed to its employees that its internal share price has been valued at just $29, down from $40. It is now understood that the company’s $95 billion valuation (making it the fifth most valuable privately owned technology company in the world) has dropped to $74 billion, a 28% valuation cut. Stripe had been expecting to go public this year, but with the economic climate as it is, this now seems unlikely.