Swedish buy-now-pay-later company Klarna has secured $1.2 billion in new financing, lifting its valuation to $10.5 billion. The deal marks the firm’s first major capital raise since 2022 and comes as the fintech sector continues to adjust to higher borrowing costs and slower growth.

Klarna became one of the best-known names in consumer fintech during the pandemic era, but the company has since faced a more difficult market as investors reassess risk and profitability across the industry. The latest funding round suggests continued backing for the company even as the wider sector remains under pressure.

The new valuation is far below Klarna’s peak during the 2021 tech boom, when investor enthusiasm pushed many private companies to record levels. Still, the fresh capital gives Klarna more room to navigate a market that has shifted sharply away from easy money and rapid expansion at any cost.

The financing also reflects renewed but cautious investor interest in fintech businesses that can show scale and a path to sustainable earnings. For Klarna, the deal provides a stronger balance sheet as it faces competition from other payment platforms and a demanding consumer spending environment.