Klarna, the Swedish fintech unicorn that made its name in buy now pay later, last week filed to go public on the New York Stock Exchange under the ticker “KLAR.” And Klarna appears to meet the height requirement, so to speak—the company reported 2024 revenue of $2.8 billion (up from about $2.3 billion in 2023) plus 2024 net profits of $21 million. On Monday, Klarna followed up its F-1—not an S-1 because the company is based in Stockholm—by announcing it’s nabbed an exclusive buy now pay later deal with Walmart, a blow to rival Affirm. 

“Klarna is in a unique position with great revenue growth and the recent partnership with Walmart,” said Reena Aggarwal, director of the Georgetown University Psaros Center for Financial Markets and Policy, via email. “Even if this IPO is successful, it is not clear that IPOs more broadly will have a similar outcome.”

It’s important to remember that Klarna got here after enduring adversity. The company’s peak valuation in 2021 was $45.6 billion, and then tumbled to a low of $6.7 billion in 2022 in response to macroeconomic conditions and the fintech downturn. Since, the company’s valuation has gradually grown again, hitting the $15 billion range in the secondary markets. 

“Klarna was one of the first companies to ‘take their medicine’ in 2022 and substantially lower their valuation,” said Greg Martin, Rainmaker Securities managing director. “It was a bitter pill to swallow, but shows a prudent reset to create a few years of sustainable valuation growth to create a positive trajectory for an IPO. I think this will serve them well as investors like to think they are investing in long-term sustainable growth stories.”

“An important aspect of Klarna’s filing is their turnaround narrative—transitioning from substantial losses to achieving profitability ahead of their public debut,” Rudy Yang, PitchBook emerging technology senior analyst, said via email. “This reflects the market’s evolving expectations. However, their consumer credit losses represent a significant portion of their expenses, and could be further impacted by a potential economic down-cycle.”

Success for Klarna could have substantial ripple effects, private markets watchers say. 

“A strong debut by Klarna could encourage profitable or nearly profitable companies to go public once macro conditions stabilize,” said Howe Ng, head of data and investment solutions at Forge Global, via email.

These ripple effects could be especially clearly felt in fintech. 

“Klarna’s IPO represents a critical test case for the fintech sector, which has experienced a significant drought of public exits in recent years,” said PitchBook’s Yang. “For context, fintech public listings generated $222.7 billion in VC exit value in 2021. In the last three years combined, they generated just $28.7 billion.”

The IPO drought and fintech’s tough times have both coincided with the end of the ZIRP (zero interest rate policy) era, which led to higher interest rates and dicey consumer spending trends. 

“Investors and fintech companies alike will closely watch Klarna’s public market debut, as the company’s valuation and investor reception will establish a benchmark that could either accelerate or further delay the next wave of fintech offerings,” Yang added via email. 

I know, I know. The essential question remains: Is the IPO window open? CoreWeave, for example, carries a few big question marks, but recently filed to go public.

“The IPO market had opened up, however, it is very tough to get IPOs done when there is uncertainty and market volatility of last week,” Georgetown’s Aggarwal told Fortune. “Only the very strongest companies can go public in this environment and even they may get lower valuations than otherwise. We might need to wait for the markets to calm down before the IPO window opens fully.”

Until then, companies must be pretty darn tall to ride the IPO roller coaster. And once you’re on the ride, you’re likely to be thrown for a loop—or even a “loop-de-loop.” So, keep your arms, feet, legs, filings, and financials inside the ride. 

ICYMI…The SEC has issued new guidance making it easier for private equity and VC firms to more publicly advertise their funds and verify accredited investors based on high minimum investments. You can read more from Axios about the latest on Rule 506(c) here. Elsewhere, the Google-Wiz deal is reportedly back on, this time for (a reported) $33 billion.

See you tomorrow,

Allie Garfinkle
X: @agarfinks
Email: alexandra.garfinkle@fortune.com
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VENTURE DEALS

- Latigo Biotherapeutics, a Thousand Oaks, Calif.-based pain treatments developer, raised $150 million in Series B funding. Blue Owl Capital led the round and was joined by Deep Track Capital, Access Biotechnology, Qatar Investment Authority, existing investors Westlake Village BioPartners, Foresite Capital, 5AM Ventures, Alexandria Venture Investments, and others.

- Maxion Therapeutics, a Cambridge , England-based antibody-based drugs developer for GPCR-driven diseases, raised $72 million in Series A funding. General Catalyst led the round and was joined by British Patient Capital, Solasta Ventures, Eli Lilly, and existing investors LifeArc Ventures, Monograph Capital, and BGF.

- PlaysOut, a London-based in-app mini-game company, raised $7 million in seed funding at a $70 million valuation from OKX Ventures, KBW Ventures, Pacific Century Group, and others.

- Occuspace, a Thousand Oaks, Calif.-based occupancy intelligence platform, raised $6 million in Series A funding. Lewis & Clark Ventures led the round and was joined by existing investors Shadow Ventures, Okapi Ventures, Cove Fund, and Hamilton Ventures.

PRIVATE EQUITY

- Mainsail Partners invested $45 million in Inn-Flow, a Raleigh, N.C.-based hotel business management and accounting software provider.

- Industrial Networking Solutions, backed by CIVC Partners, acquired Source Inc., a Lenexa, Kan.-based wireless solutions provider. Financial terms were not disclosed.

- Investcorp agreed to acquire a majority stake in Miebach, a Frankfurt-based supply chain and logistics consultancy. Financial terms were not disclosed.

OTHER

- PepsiCo agreed to acquire poppi, an Austin-based prebiotic soda brand, for a net purchase price of $1.7 billion.

- Taiho Pharmaceutical agreed to acquire Araris Biotech, a Zurich-based antibody drug conjugates developer, for $400 million.

- Cleary Gottlieb acquired Springbok AI, a London-based legal AI tech developer. Financial terms were not disclosed.

PEOPLE

- Israel Secondary Fund, a Herzliya, Israel-based secondary fund, added Ophir Reshef as a partner. Previously, he was at Vertex Fund.