Lunar Raises €40M Series C to Expand into Buy Now, Pay Later

Lunar, a Nordic banking disruptor that began as a personal finance management application before securing a full banking license in 2019, has obtained €40 million in Series C funding from its current investors.

This new capital infusion follows a previously announced €20 million Series B round in April and comes after Lunar introduced Pro subscription services—a strategy adopted by several other European challenger banks—along with personal loans and business bank accounts, which were launched in August.

The business account offering has evidently been highly successful, potentially indicating, as seen in the U.K., a significant demand for more accessible banking solutions for self-employed individuals. Lunar Business reports that, within months of its debut in Denmark, it has onboarded over 50% of all newly established sole trader businesses in the nation.

Additionally, it’s been reported that Lunar is experiencing exceptional user engagement, with customers spending an average of €1,100 monthly, compared to a €212 EU average for card spending. Currently, the bank serves 5,000 business clients and 200,000 individual customers across Denmark, Sweden, and Norway.

Notably, following the introduction of its initial consumer lending products on its own balance sheet, Lunar is now targeting the “buy now, pay later” (BNPL) sector, potentially competing with companies like Klarna, valued at $10.65 billion, and Affirm in the U.S., which recently filed for an initial public offering. PayPal is another major player in the BNPL market.

Ken Villum Klausen, Lunar’s founder and CEO, attributes the launch of BNPL to the unique characteristics of the Nordic banking environment. He describes it as “the most profitable banking landscape globally, yet also the most protective, with limited external competition.” He explains that this results in traditional banking customers typically obtaining all their financial products from a single bank.

Within this framework, Lunar’s BNPL products are designed as “post-purchase” options, where the app will offer users the opportunity to divide a purchase into installments after it has been completed—a concept similar to Curve’s planned credit product. For instance, after purchasing a new television, the app will inquire if the user wishes to pay in installments. Klausen clarifies, “This approach doesn’t necessitate merchant agreements and will function with both in-store and online transactions.”

“We don’t consider Klarna a direct competitor because they aren’t integrated into the Nordic clearing system,” Klausen states. “Consequently, you can’t use it to pay bills, receive your salary, or manage everyday banking. Klarna is very large in Sweden, but has a smaller presence in Denmark, Norway, and Finland.”

To date, Lunar has raised a total of €104 million from investors including Seed Capital, Greyhound Capital, Socii Capital, and Chr. Augustinus Fabrikker. The company maintains offices in Aarhus, Copenhagen, Stockholm, and Oslo, employing over 180 individuals. It intends to introduce its banking application in Finland during the first half of 2021.