What is Klarna? Klarna Review

Basic Situation

Founded in 2005, Klarna provides a simpler, more affordable and smarter payment method than credit cards. Using its APP, consumers can shop from any store or brand in installments. On the APP, consumers can also add their favorite products to their wishlist, enjoy unique discounts, set price reduction notifications, and intelligently track consumption and delivery.

Current situation

Klarna is part of The Klarna Group. Klarna provides payment solutions for 90 million consumers at 200,000 merchants in 14 countries, with 1 million transactions per day, accounting for 10% of the Nordic e-commerce market share. These include direct payment, "buy now, pay later" and installment payment plans. H&M, Adidas, IKEA, Expedia Group, ASOS, Pelotan, Nike, Sephora and others are its partners.

Business Model

Klarna wants to simplify the online shopping process, requiring consumers to enter only the most important information, such as email, mailing address or mobile phone number, to make online purchases. The company will quickly process this information and decide whether to authorize your credit. If authorized, you only need to pay within 14 days. If you pay some extra late surcharges, this period can be extended. If you don't pay on time, it will be handled by a debt collection agency.

Financing

Before 2016, Klarna received multiple investments from Sequoia Capital, DST Global and General Atlantic.

The official website shows that Klarna Group was established when the company acquired SOFORT in 2014. Klarna is backed by investors including Sequoia Capital, Bestseller, Permira, credit card payment giant Visa and London venture capital firm Atomico.

In June and July 2017, Klarna received three investments in two months. They were from Brightfolk, a platform run by fashion tycoon Anders Holch Povlsen, credit card payment giant Visa, and private equity investment company Permira. After the third round of financing, media reports said Klarna's overall valuation was as high as $2.5 billion.

On October 9, 2018, Klarna received another $20 million in financing from fashion retail giant H&M.

In August 2019, Swedish unicorn fintech company Klarna completed its latest round of massive financing of US$460 million, which it said would be used to enter the US market.

In September 2020, Swedish payment platform Klarna received a new round of financing of US$650 million, with a post-transaction valuation of US$10.65 billion, becoming the highest-valued (unlisted) fintech startup in Europe and the fourth-highest-valued in the world. This round of financing was led by Silver Lake, with participation from Singapore's sovereign wealth fund GIC and others. Other investors in Klarna include Sequoia Capital, Ant Group, Commonwealth Bank of Australia, etc.

Acquisition

After Klarna acquired German payment tool Sofort for $150 million, in October 2016, Klarna acquired P2P payment application Cookies.

In February 2017, Klarna announced the acquisition of German counterpart Billpay for US$75 million.

In September 2018, Klarna acquired the retail finance division of Close Brothers to consolidate its position in the UK retail finance market.

In January 2020, Etsy announced a partnership with Swedish payment company Klarna, allowing Etsy users to pay for goods in installments through Klarna. For sellers, using the third-party payment platform Klarna allows them to receive all payment amounts at once, without having to wait for monthly installments.

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