Company:Klarna

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Short description: Swedish fintech company
Klarna
TypePrivate
IndustryFinance
Founded2005; 19 years ago (2005)
Founders
  • Sebastian Siemiatkowski
  • Niklas Adalberth
  • Victor Jacobsson
HeadquartersStockholm, Sweden
Key people
RevenueUS$1.9 billion (2022)
Total assetsUS$11.9 billion (2022)
Total equityUS$1.2 billion (2022)
Number of employees
5,441 (2022)
Websiteklarna.com
Footnotes / references
[1][2]

Klarna Bank AB, commonly referred to as Klarna, is a Swedish fintech company that provides online financial services. The company provides payment processing services for the e-commerce industry, managing store claims and customer payments.[3] The company is a "Buy now, pay later" service provider.[4]

The company has more than 5,000 employees, most of them working at the headquarters in Stockholm and Berlin. In 2021, the company handled about US$80 billion in online sales.[1] (As of 2011), about 40% of all e-commerce sales in Sweden went through Klarna.[5] In 2021, the company was Europe's most valuable private tech company, at a $45.6 billion valuation. However, their valuation was cut to $6.7 billion in 2022 after struggling to attract additional outside investment.[6][7][8][9]

History

The three founders Sebastian Siemiatkowski, Niklas Adalberth and Victor Jacobsson founded Klarna in 2005 after participating in the Stockholm School of Economics annual entrepreneurship competition. [10][11][12] angel investor Jane Walerud, invested in their company and connected them with a team of programmers.[13]

In 2007, venture capital firm Investment AB Öresund invested in the company.[14] Three years later, Klarna started providing services in Norway, Finland Denmark, Germany and the Netherlands. They also received an investment from Sequoia Capital,[15] and increased their revenue by over 80% to US$54 million (~400 million SEK).[16] In 2011, British newspaper The Telegraph listed Klarna as one of Europe's 100 most promising young tech companies.[17]

In 2011, growth equity firm General Atlantic led a $155 million investment round joined by DST Global, and General Atlantic's managing director Anton Levy joined the board of directors.[18][19] In May 2011, Klarna acquired Israeli company Analyzd, which provided risk management and fraud prevention services

In 2013, Klarna and German Sofortüberweisung (de) merged to become Klarna Group.[20]

Klarna launched in the United States in September 2015,[21] and the US has become its principal focus for future growth, after securing exclusive partnerships with luxury department store Macy's.[22][23][3][24] That year, Minister of Enterprise and Innovation Mikael Damberg dubbed Klarna one of Sweden's "five unicorns", by which he meant startup companies that had succeeded in growing and attracting international investments. The other four companies were Spotify, Mojang, Skype, and King.[25]

In 2019, Klarna raised $460 million with plans to expand its operations the US, with participation from Dragoneer Investment Group, Commonwealth Bank of Australia, HMI Capital, Merian Chysalis Investment Company Limited and others.[26] This funding round valued the company at $5.5 billion, making Klarna the largest fintech start-up in Europe.[27] In 2020, Klarna acquired Nuji, a marketplace for fashion and lifestyle goods.[28]

In 2020, Ant Financial, the payment affiliate of Chinese e-commerce company Alibaba, invested in Klarna as part of a partnership between the two firms.[29]

In June 2021, Klarna raised $639 million in a fundraising round led by SoftBank Group's Vision Fund 2, increasing the company's valuation to $45.6 billion.[30]

In November 2021, Klarna launched its physical card, which enabled users to make purchases in interest-free installments. [31] In January 2022, Klarna launched their physical card in the UK. [32] The card had a wait list of 400,000 users (As of January 2022).[33]

In March 2022, Klarna acquired PriceRunner, a company that provides price comparisons on products.[34]

In May 2022, Klarna laid off roughly 10% of its workforce.[35][36]

In June 2022, Klarna announced a partnership deal with card issuer Marqeta to bring physical Visa cards to the US.[37]

In July 2022, Klarna raised $800 million in funding at a valuation of $6.7 billion. Their valuation dropped 85% in one year, in line with decreasing valuations of unprofitable technology companies.[8] Klarna lost $580 million between January and July 2022.[38] In September of that year, Klarna announced plans to lay off an additional 100 employees. The announcement came after budget revisions due to its drop in valuation and announced losses.

In October 2022, the company launched a new "Klarna Creator" application for retailers and influencers to collaborate on brand campaigns and to track their earnings.[39]

In January 2024, the company announced a plan for a monthly subscription plan ahead of an anticipated initial public offering later in the year. Users of the service, called Klarna Plus, would earn double the amount of usual reward points, attain access to a selection of discounts from partners like Nike and Instacart, and see service feeds waived when using the Klarna One Time Card. The fee would be $7.99 each month, as opposed to typical fees of $1 or $2 when using the service outside the network at retailers like Walmart or Costco. The company's Chief Marketing Officer, David Sandstrom, said there were also plans for a high-yield savings account in the US, with potential for subscribers to earn a higher rate than non-users.[40][41][42]

Controversy

Regulation

In the UK, Klarna operates in the rapidly growing post-payment sector which has been criticised for encouraging consumers to get themselves into unserviceable levels of debt.[43] In February 2021, the UK Government announced that the sector would be subject to regulation from the UK's Financial Conduct Authority.[44]

In Sweden a large number of complaints regarding Klarna were sent to the Swedish Consumer Agency in 2014. Many customers had received reminder fees and threats about debt collection without having received a proper invoice. It was speculated if this was an unethical business model since the company made money on these reminder fees and Klarna also had a subsidiary dedicated to debt collection. The Swedish Consumer Agency also found a reason to investigate how Klarna added credit fees for partial payments.[45] The year before the co-founder Niklas Adalberth said in a presentation during the startup conference Arctic15 that: "That is one of our revenue streams [...] the best customer is the one that doesn't pay directly but actually [gets] a reminder and then also debt collection because we are able to add the legal fees."[46]

In Germany, the District Court of Bremerhaven ruled in 2022 that Klarna could not demand a flat rate of €1.20 for a reminder by e-mail because Klarna had not submitted any corresponding costs.[47][48]

Privacy

In February 2020, Der Spiegel reported that Klarna's autofill feature allowed anyone to extract personal information, such as phone number, postal address and date of birth, only based on the email address and postal code of a customer.[49]

In October 2020, Klarna mistakenly sent a marketing email to people who had never disclosed their contact information to Klarna. This triggered an investigation by the Information Commissioner's Office in the UK. [50]

For a brief period in May 2021, users could view the information of other users using their own login information. Klarna claims that user information was exposed randomly, and that these exposures only contained non-sensitive data. However, users claimed that they were able to view addresses, phone numbers, and payment details of other people.[51][52]

Identity thieves have used Klarna to commit fraud. They exploited Klarna's buy now, pay later scheme to make purchases with a small upfront payment on a stolen account, flip those goods at a much higher price, and then evade making payments.[53][54][55] The company stated that its fraud checks and controls are as strict as those of banks.[54]

In March 2022, the Swedish Authority for Privacy Protection (Integritetsskyddsmyndigheten) fined Klarna 7.5 million kr for inadequacies in its privacy notice and handling of personal data. Klarna stated it would appeal the decision for further clarification on the guidelines.[56][57]

Layoffs

In May 2022, Siemiatkowski revealed it would be laying off more than 10% of its employees. A former employee described the layoffs as "chaotic". When Siemiatkowski posted a list of the fired employees on LinkedIn, several users described his post as "tone deaf".[58]

See also

References

  1. ↑ 1.0 1.1 "Klarna Bank AB 2022 Annual Report". Klarna. https://www.klarna.com/assets/sites/15/2023/02/27194134/2022-Klarna-Bank-AB_Annual-Report_EN.pdf. 
  2. ↑ Milne, Richard (1 December 2020). "Michael Moritz named chairman of Swedish fintech Klarna". Financial Times. https://www.ft.com/content/b831b08c-2c5d-4903-819b-6b4dffcf7ac2. 
  3. ↑ 3.0 3.1 "About us". https://www.klarna.com/us/about-us/. 
  4. ↑ Milne, Richard (5 March 2013). "A Swedish take on 'buy now, pay later'". Financial Times. https://www.ft.com/content/35f1d24a-7f6c-11e2-8d96-00144feabdc0. 
  5. ↑ "E-barometern". http://www.hui.se/web/E-barometern.aspx. 
  6. ↑ "Klarna's valuation crashes to under $7bn in tough funding round" (in en-US). 11 July 2022. https://www.ft.com/content/66b65d68-d62e-4aec-a1ad-a7d9e2ba0435. 
  7. ↑ "Klarna sees its value slashed by 85% in latest round of fundraising" (in en). 11 July 2022. https://www.theguardian.com/technology/2022/jul/11/klarna-sees-its-value-slashed-by-85-in-latest-round-of-fundraising. 
  8. ↑ 8.0 8.1 Mukherjee, Supantha (11 July 2022). "Klarna raises $800 million as valuation plunges 85% in a year" (in en). Reuters. https://www.reuters.com/business/finance/klarnas-valuation-slumps-67-bln-with-800-mln-raise-2022-07-11/. 
  9. ↑ "Sebastian Siemiatkowski" (in en). https://www.forbes.com/profile/sebastian-siemiatkowski/. 
  10. ↑ Stothard, Michael (13 July 2021). "Klarna: everything you need to know before you use it". Sifted EU. https://sifted.eu/articles/klarna-everything-to-know/. 
  11. ↑ Graham, August (2 February 2021). "Klarna – the pay later giant and Europe's biggest private fintech". Yahoo Finance. https://uk.finance.yahoo.com/news/klarna-pay-later-giant-europe-130112660.html. 
  12. ↑ Montén, Ellen (23 May 2016). "The story of how a complete coincidence led to the creation of the $2 billion fintech startup Klarna". http://nordic.businessinsider.com/the-founders-of-swedish-fintech-unicorn-klarna-say-it-all-started-when-they-missed-a-ship-across-the-pacific-2016-5. 
  13. ↑ "Interview: from Burger King to boardroom, how Klarna became". http://www.whiteboardmag.com/interview-from-burger-king-to-boardroom-how-klarna-became-a-payments-giant/. 
  14. ↑ Bernet, Magnus (18 March 2016). "Börs: Öresund och Creades säljer samtliga aktier i Klarna" (in sv). Analysguiden. SIX News (Aktiespararna). https://www.aktiespararna.se/analysguiden/nyheter/bors-oresund-och-creades-saljer-samtliga-aktier-i-klarna. 
  15. ↑ "How Klarna got investment from Sequoia Capital". Business Insider. http://www.businessinsider.com/klarna-ceo-looked-up-sandhill-road-on-google-maps-before-sequoia-capital-investment-2016-4. 
  16. ↑ "Klarna acquires Analyzd to tie social to finance and payments". TechCrunch. AOL. 4 May 2011. https://techcrunch.com/2011/05/04/klarna-acquires-analyzd-to-tie-social-to-finance-and-payments/. 
  17. ↑ "Start-Up 100: A-Z". Telegraph.co.uk. 5 April 2011. https://www.telegraph.co.uk/technology/technology-startup100/8428669/Start-Up-100-A-Z.html. 
  18. ↑ Schonfeld, Erick. "European Payment Service Klarna Raises A Whopping $155 Million From DST And General Atlantic". TechCrunch. https://techcrunch.com/2011/12/08/klarna-155-millio/. 
  19. ↑ "Klarna Closes $155 Million Financing to Accelerate Global Expansion". http://www.generalatlantic.com/media/archive/klarna-closes-$155-million-financing-to-accelerate-global-expansion/. 
  20. ↑ Ohr, Thomas (18 December 2013). "Klarna acquires German SOFORT AG for $150 million /". https://www.eu-startups.com/2013/12/klarna-acquires-german-sofort-ag-for-150-million/. 
  21. ↑ "Fast-growing Klarna expanding its role easing e-commerce". The Columbus Dispatch. http://www.dispatch.com/content/stories/business/2016/03/27/1-fast-growing-klarna-expanding-its-role-easing-e-commerce.html. 
  22. ↑ "Inc. Founders Project with Alexa von Tobel: Why Friction is Underestimated with Sebastian Siemiatkowski of Klarna on Apple Podcasts" (in en-GB). https://podcasts.apple.com/gb/podcast/why-friction-is-underestimated-with-sebastian/id1455941009?i=1000583138733. 
  23. ↑ "Klarna annual report 2019". Klarna. March 2020. https://www.klarna.com/assets/2020/04/Klarna_Bank_AB_publ_Annual_Report_2019_EN.pdf. 
  24. ↑ "Swedish payments firm Klarna shifts focus to U.S. as revenues swell". Reuters. 24 February 2016. https://www.reuters.com/article/us-sweden-tech-klarna-idUSKCN0VX1W5. 
  25. ↑ Olsson Jeffery, Miriam (24 April 2015). "Damberg om Sveriges fem enhörningar". http://www.svd.se/damberg-om-sveriges-fem-enhorningar. 
  26. ↑ "Klarna raises $460 million, looks to expand its payments presence in the US" (in en-US). 6 August 2019. http://social.techcrunch.com/2019/08/06/klarna-raises-460-million-looks-to-expand-its-payments-presence-in-the-u-s/. 
  27. ↑ Milne, Richard (6 August 2019). "Klarna becomes most valuable EU fintech with $5.5bn valuation". Financial Times. https://www.ft.com/content/3f16a05c-b828-11e9-8a88-aa6628ac896c. 
  28. ↑ "Nuji | Designer Fashion & Homeware from the best online stores" (in en). https://www.nuji.com/. 
  29. ↑ Browne, Ryan (4 March 2020). "Chinese payments giant Ant Financial buys a stake in Swedish fintech start-up Klarna" (in en). https://www.cnbc.com/2020/03/04/alibaba-fintech-affiliate-ant-financial-buys-stake-in-swedens-klarna.html. 
  30. ↑ Milne, Richard (10 June 2021). "SoftBank investment helps Klarna to $45.6bn valuation". https://www.ft.com/content/9f73b352-723f-471b-b098-5f090279b5bb. 
  31. ↑ Hall, Christine (23 November 2021). "Klarna offers 'Pay Now' option in US, Klarna Card coming soon". https://techcrunch.com/2021/11/23/klarna-offers-pay-now-option-in-u-s-klarna-card-coming-soon/. 
  32. ↑ "The Klarna card is here: we're launching a no interest, no late fees physical card in the UK". Klarna. https://www.klarna.com/uk/blog/the-klarna-card-is-here-were-launching-a-no-interest-no-fees-physical-card-in-the-uk/. 
  33. ↑ "Klarna: 'buy now, pay later' firm to launch card in the UK". The Guardian. 26 January 2022. https://www.theguardian.com/money/2022/jan/26/klarna-buy-now-pay-later-firm-to-launch-card-in-the-uk. 
  34. ↑ Cameron, Isabel (4 April 2022). "Klarna completes acquisition of PriceRunner –" (in en-US). https://www.chargedretail.co.uk/2022/04/04/klarna-completes-acquisition-of-pricerunner/. 
  35. ↑ "Company announcement from CEO Sebastian – Klarna Sverige". https://www.klarna.com/se/blogg/company-announcement-from-ceo-sebastian/. 
  36. ↑ "Klarna lays off 10% of its workforce" (in en-US). 23 May 2022. https://social.techcrunch.com/2022/05/23/klarna-lays-off-10-of-its-workforce/. 
  37. ↑ PYMNTS (1 June 2022). "Klarna Intros Physical Visa Card With Marqeta" (in en-US). https://www.pymnts.com/buy-now-pay-later/2022/klarna-intros-physical-visa-card-with-issuing-platform-marqeta/. 
  38. ↑ "Klarna to make second round of job cuts" (in en-US). 22 September 2022. https://sifted.eu/articles/klarna-second-round-layoffs/. 
  39. ↑ Forristal, Lauren (19 October 2022). "Klarna launches new creator features and shoppable video" (in en-US). https://techcrunch.com/2022/10/19/klarna-launches-new-creator-features-and-shoppable-video/. 
  40. ↑ Son, Hugh (24 January 2024). "Klarna to debut $7.99 monthly plan as buy now, pay later firm seeks new revenue sources ahead of IPO" (in en). https://www.cnbc.com/2024/01/24/klarna-to-debut-7point99-monthly-plan-ahead-of-ipo.html. 
  41. ↑ Woodward, Kevin. "Eye on BNPL: Klarna Debuts a Subscription Service; PublicSquare Enlists Credova" (in en-US). https://www.digitaltransactions.net/eye-on-bnpl-klarna-debuts-a-subscription-service-public-square-enlists-credova-for-bnpl/. 
  42. ↑ Forristal, Lauren (24 January 2024). "Klarna introduces $7.99 'Klarna Plus' subscription plan as it approaches an IPO" (in en-US). https://techcrunch.com/2024/01/24/klarna-introduces-7-99-klarna-plus-subscription-plan-as-it-approaches-an-ipo/. 
  43. ↑ "Klarna: 'buy now, pay later' system that is seducing millennials". 17 November 2018. https://www.theguardian.com/money/2018/nov/17/klarna-buy-now-pay-later-system-that-is-seducing-millennials. 
  44. ↑ "Buy now, pay later firms such as Klarna face stricter controls". BBC News. 2 February 2021. https://www.bbc.co.uk/news/business-55895162. 
  45. ↑ Carolina Neurath (1 April 2014). "Large number of complaints regarding invoices from Klarna". Svenska Dagbladet. http://www.svd.se/naringsliv/branscher/handel-och-tjanster/mangder-av-klagomal-mot-klarnas-fakturor_3420828.svd. 
  46. ↑ Niklas Adalberth of Klarna at Arctic15. ArcticStartup. 25 February 2013. 31 minutes in. Archived from the original on 20 November 2021. Retrieved 20 November 2021.
  47. ↑ "Amtsgericht Bremerhaven vom 11. Januar 2022, 51 C 1062/21" (in de). https://openjur.de/u/2385572.html. 
  48. ↑ "Gerichtsurteil: Sind Mahngebühren bei Klarna zulässig?" (in de). https://www.waltroper-zeitung.de/ueberregionales/gerichtsurteil-sind-mahngebuehren-bei-klarna-zulaessig-w1724005-11000150000/. 
  49. ↑ "Dritte konnten Telefonnummern von Klarna-Kunden abrufen" (in de). 11 February 2020. https://www.spiegel.de/netzwelt/web/klarna-telefonnummern-von-kunden-waren-fuer-dritte-abrufbar-a-a32cf8d5-04e6-4588-ba4f-46151a714523. 
  50. ↑ "Privacy watchdog to probe Klarna after email backlash". BBC News. 13 October 2020. https://www.bbc.com/news/business-54521820. 
  51. ↑ "Klarna mobile app bug let users log into other customers' accounts". BleepingComputer. https://www.bleepingcomputer.com/news/security/klarna-mobile-app-bug-let-users-log-into-other-customers-accounts/. 
  52. ↑ "Klarna comment: statement on app bug". 27 May 2021. https://www.klarna.com/uk/blog/written-statement-on-app-bug/. 
  53. ↑ "Klarna: 'I got a £30 bill – but I didn't buy anything'". BBC News. 29 January 2021. https://www.bbc.com/news/business-55829879. 
  54. ↑ 54.0 54.1 "'Criminals love buy now, pay later': How fraudsters exploit popular interest-free payment plans". 18 November 2021. https://www.cnbc.com/2021/11/18/criminals-exploit-buy-now-pay-later-services-like-klarna-and-afterpay.html. 
  55. ↑ "Maksufirma Klarnan kautta pystyy tilaamaan tavaraa toisen nimiin – MOT:n testi osoittaa, kuinka pahasti ruotsalaisyhtiön tietoturva vuotaa" (in fi). 13 July 2021. https://yle.fi/uutiset/3-12014974. 
  56. ↑ "Klarna comment: SDPA's conclusion of their audit". 29 March 2022. https://www.klarna.com/uk/blog/klarna-comment-sdpas-conclusion-of-their-audit/. 
  57. ↑ "Administrative fine against Klarna after investigation". 31 March 2022. https://www.imy.se/en/news/administrative-fine-against-klarna-after-investigation/. 
  58. ↑ Makortoff, Kalyeena (1 June 2022). "Klarna criticised for chaotic handling of job cuts". https://www.theguardian.com/business/2022/jun/01/klarna-criticised-for-chaotic-handling-of-job-cuts. 

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