Klarna - Fintech Europe

Klarna

Klarna Bank AB, more commonly known as just Klarna, is a Swedish company that provides online financial services. It was founded in 2005 in Stockholm, Sweden. Its founders Sebastian Siemiatkowski, Niklas Adalberth, and Victor Jacobsson participated in the Stockholm School of Economics entrepreneurship award in 2005 with their idea on how to provide a safe and simple online shopping payment method. Although their vision was not very well understood in the competition, that hasn’t stopped them from trying to bring it to life. Klarna was founded that same year.

Klarna office (source glassdoor.com)

After five years of successful business in Sweden and two rounds of investments, the company expanded to Norway, Germany, the Netherlands, Finland, and Denmark, in 2010. In 2011, Klarna acquired Analyzd, an Israeli company that specializes in risk management and online payments. In the following years, Klarna continued to grow and expand to new markets – Austria in 2012, the United Kingdom in 2014, and the United States in 2015. In 2014 it also acquired German SOFORT. Last year, Klarna raised an additional $460 million in investments. It is now valued at $5.5 billion, which makes it the largest fintech start-up in Europe. The company has more than 2,500 employees, most of them working at the headquarters in Stockholm.

Some of the notable investors that decided to back Klarna, among the many others, are Sequoia Capital, Bestseller, Permira, Visa and Atomico.

At this very moment, Klarna has 85 million end-customers, 205 thousand merchants in 17 different countries, 1 million transactions per day, and 10% of e-commerce market share in Northern Europe. Some of the biggest retailers and e-commerce platforms in the world are using Klarna’s services, including AliExpress, H&M, ASOS, Expedia Group, IKEA, Farfetch, Adidas, Spotify, Samsung, and Nike. It was named one of the five Swedish “unicorns”, privately held start-up companies valued at over $1 billion.

Although Klarna grew, evolved and expanded to many new markets, its goal of making online shopping easy hasn’t changed. Their mission is still the same and relevant as ever, to make paying as simple, safe, and smooth as possible.

Klarna is an e-commerce payment solutions platform for merchants and shoppers. It offers three payment methods, as well as 6-36 months of financing at interest rates that are a bit lower than a credit card. Besides direct payments, the platform provides installment plans and pay after delivery options. That way you can pay up to 30 days later, and in three installments with zero interest and fees. Klarna also developed an app that enables its customers to make payments and track purchases.

In recent months, Klarna made the headlines more than once. In February, it reported its first annual loss, after many years of being very profitable. Overall, the business is still going great, with steady growth in transaction volumes, revenues and number of merchants. The main reason behind the loss was a heavy investment in establishing an engineering hub in Berlin, as well as the focus on growth in the United States. Klarna’s spokesperson also added it plans to expand to several new markets in 2020.

A couple of days ago, Ant Financial Group, the owner of the Alipay payment platform from China, announced it is taking a minority stake in Klarna. The value of the investment has not been publicly disclosed, but the company confirmed that the stake is less than 1 percent.

We have no doubts that 2020 will be another fruitful year for Klarna, with expanding to new markets and reaching new customers and merchants.