Klarna Bank AB, commonly referred to as Klarna, is a Swedish bank that provides online financial services such as payments for online storefronts, direct payments, post purchase payments and more. Their core service is to assume stores’ claims for payments and handle customer payments, thus eliminating the financial risks for both the seller and buyer.
The company has more than 3,000 employees, most of them working at the headquarters in Stockholm. In 2019, the company handled about $35 billion in online sales. As of 2011, about 40% of all e-commerce sales in Sweden went through Klarna.
The three founders Sebastian Siemiatkowski, Niklas Adalberth and Victor Jacobsson participated in the Stockholm School of Economics annual entrepreneurship award in 2005 with their idea on how to provide consumers and merchants with safer and simpler online shopping payment methods. However, their idea did not receive enthusiasm and their entry was among the last in the competition.
Despite this, they decided to found Klarna in mid-2005 and started operations in Sweden. An angel investor and previous Erlang Systems sales manager, Jane Walerud, invested in their company and put them in contact with a team of programmers to help them build the platform.
In the end of 2007, venture capital firm Investment AB Öresund invested in the company. Three years later, Klarna started selling their services in Norway, Finland and Denmark.
Klarna also started their operations in Germany and the Netherlands in 2010, and in May the same year, San Francisco-based Sequoia Capital entered as investors. During 2010, Klarna increased their revenues by over 80% to US$54 million (~400 million SEK). In the early 2011, British newspaper The Telegraph listed Klarna as one of Europe’s 100 most promising young tech companies.
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. In May 2011, Klarna acquired Israeli company Analyzd, which had business activity on markets in Europe, Israel and the United States. Analyzd specialise in risk management and online payments, and its founders previously worked for PayPal.
Klarna began offering services in Austria in 2012, and in 2013, Klarna and German SOFORT AG merged after Klarna acquired SOFORT Banking from the majority shareholder Reimann Investors, becoming Klarna Group. Both companies would continue to offer their products side by side and operate on a stand-alone basis.
In 2018, Klarna reported that it had more than 60 million users and some 90,000 online merchants have so far hired it to run their checkouts. Klarna launched in the United States in September 2015, and the US has become its principal focus for future growth. 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.
In 2019, Klarna raised $460 million with plans to expand payment presence in the US, with participation from Dragoneer Investment Group, Commonwealth Bank of Australia, HMI Capital, Merian Chysalis Investment Company Limited and others. This funding round valued the company at $5.5 billion, becoming the largest fintech start-up in Europe. In 2020, Klarna acquired Nuji.
In 2020, Ant Financial, the payment affiliate of Chinese e-commerce company Alibaba, invested in Klarna as part of a global partnership between the two firms.
Parts of Klarna’s code base are written in Erlang, a programming language designed by Ericsson for highly parallel, scalable applications.
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