Klarna Earns Strategic Investment from Visa

“My, what a fine, new banking license you have there, Klarna!”

We don’t know if Klarna’s decision to obtain a banking license played a role in Visa’s decision to invest an undisclosed amount in the Swedish payments innovator. But the announcement today that Visa has bought a small stake in Klarna is a big vote of confidence in the company’s apparent determination to diversify its business into other areas, such as card services.

For Visa, the Klarna investment is part of its strategy to open up its ecosystem and support companies that are innovating to make the payment experience more rewarding for consumers around the world. Visa EVP for Innovation and Strategic Partnerships, Jim McCarthy praised Klarna’s proven “expertise in consumer credit and online purchasing” and said the two companies “share a vision for how today’s online and mobile commerce experiences can be as simple as they are in the real world.” Klarna CEO Sebastian Siemiatkowski called the partnership a “natural fit” and added that it would enable Klarna to bolster its “global presence and product portfolio.”

The funding for Klarna is the third investment in the company this year. Earlier this month, Klarna announced that Brightfolk, a firm held by Anders Holch Povlsen, owner of European fashion giant, BESTSELLER, had acquired a strategic stake in the company. The 10% equity investment was valued at $225 million given Klarna’s valuation of $2.25 billion. And in March, the company raised $5 million (KR46 million) from Nordic early-stage, venture capital firm Creandum. Klarna has raised more than $375 million in total funding.

Founded in 2005 in Stockholm, Sweden and now headquartered in Columbus, Ohio, Klarna demonstrated its technology at FinovateSpring 2012. The company serves more than 60 million customers and 70,000 retailers in Europe and North America. TechCrunch’s coverage of today’s Visa investment notes that as of 2016 Klarna was processing 400,000 transactions daily, and generated revenues of $318 million in 2015. TechCrunch also reports that Klarna’s transaction growth is up 50% year-over-year in 2016, and that 17,000 new merchants were added in the last quarter.

Visa demonstrated its technology at FinovateSpring 2010. In 2014, the company’s Visa Developers Program presented The Future of Commerce, a look at how to connect with Visa’s networking using open APIs and SDKs, and led workshops on API-less web, Android SDK, and Apple Pay integration.

Europe’s Got a Brand New Bank as Klarna Earns License

As former Vice President Joe Biden might put it, today’s news that Klarna has been granted a full banking license is truly a BFD.

“Big Fintech Deal,” that is.

“We are now one of Europe’s largest banks with 60 million customers, 70,000 merchants, and working seamlessly across borders,” Klarna CEO Sebastian Siemiatkowski said (pictured). He called the banking license an “exciting milestone” for the Stockholm, Sweden-based company, in specific, and for the European banking sector, in general. The full banking license was granted by the Swedish Financial Supervisory Authority, Finansinspektionen, and will enable Klarna to provide a range of new services – from payment cards to digital wallets – to consumers throughout the continent. Indeed, TechCruch reported today that as part of the licensing, Klarna will legally change its name to “Klarna Bank” – though it will continue to operate in the market as “Klarna.”

Highlighting the company’s history as a e-commerce innovator and its future as a “consumer-oriented, product driven, and technology intensive bank,” Siemiatkowski trained his sights on retail banking itself. “We will … (provide) solutions that ensure a smooth customer experience, help people streamline their financial lives and continue to support businesses by solving the complexity in handling payments,” he said, adding, “the opportunities are tremendous, it is a thrilling prospect.”

Coverage of the news in The Financial Times notes that Siemiatkowski had planned on making this kind of move for some time. Blaming regulations for helping limit banks’ exposure to the competition that is commonplace in the technology world, Siemiatkowski criticized the way too many banks provide customer service that is both poor and overpriced. Ironically, he suggested that new, disruptor-friendly, regulations might be just the fix that’s needed, saying new rules might “set the right prerequisites for the destruction of that industry.”

Founded in 2005, Klarna demonstrated its after-delivery payment solution at FinovateSpring 2012. Earlier this month the company announced a major new strategic investor, Brightfolk, which acquired shares valued at more than $225 million from existing Klarna shareholders. Brightfolk is held by Anders Holch Povlsen, owner of European fashion company, BESTSELLER, which is a long-time partner of Klarna. In February, the Klarna integrated with Radial’s Payment platform, expanding e-commerce payment options for the company – the same month Klarna announced that it was acquiring German online payment provider, BillPay, from Wonga. Klarna began the year with news that it was teaming up with ASOS Partners, bringing its “pay after delivery” option to consumers in the Nordic region.

With more than $376 million in funding. Klarna is believed to have a valuation of $2.25 billion. The company is among a number of fintech companies in Europe and the U.S. that are pursuing banking licenses to diversify their businesses of late. Online lender SoFi applied for federal deposit insurance earlier this month, one significant step toward launching an digital-only SoFi Bank. And London’s TransferWise unveiled a new “Borderless” foreign exchange account in May that observers believe is part of the company’s goal to more directly challenge banks.

Finovate Alumni News

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This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

 

Klarna Receives Investment from Brightfolk

Online payments company Klarna announced a major new strategic investor this week. Brightfolk has reportedly become a qualified owner of Klarna, meaning it has purchased at least 10% of the company. Brightfolk is held by Anders Holch Povlsen, owner of European fashion company, BESTSELLER. Povlsen will acquire shares from existing shareholders General Atlantic, DST Global and Niklas Adalberth, all of whom will retain a stake in Klarna.

Specific terms of the deal were undisclosed, but based on Klarna’s most recent valuation of $2.25 billion we can extrapolate that Brightfolk contributed $225 million or more in equity funds. TechCrunch reported that today’s deal is an up round, meaning Klarna is now valued at more than $2.25 billion.

Writing in the press release announcing the investment, Sebastian Siemiatkowski, Klarna co-founder and CEO said, “Klarna has successfully been partnering with BESTSELLER for a number of years. This has given him a firsthand insight into the strengths of our offerings and therefore a unique ability to strategically support the future development of the company. I am delighted to welcome such a strong partner into Klarna.”

Klarna helps 70,000 merchants offer payment solutions to 60+ million users in Europe and North America. Founded in 2005 in Stockholm, Klarna is active in 18 countries. The company is now headquartered in Ohio with 1,500 employees working in offices in Columbus, Ohio; San Francisco; New York; Tel Aviv; and throughout Europe.

Klarna demonstrated its online payment-processing service at FinovateSpring 2012. In 2016, the company experienced a 50% increase in transaction volumes YOY. Also in 2016, 12 million users tried Klarna’s services for the first time. Earlier this year, the company acquired online payment provider BillPay from Wonga for $75 million.

Finovate Alumni News

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This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

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This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

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This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

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This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

Klarna Acqui-hires P2P Payment Company Cookies

screen-shot-2016-11-22-at-8-30-34-am

Online payment solutions company Klarna made a move to bolster the brain power of its team today. The company has acquired Germany-based Cookies, a P2P payments startup that filed for bankruptcy earlier this month. Terms of the deal were not disclosed.

Cookies was founded by former N26 employees Garry Krugljakow and Lamine Cheloufi who launched the startup in an effort to become the Venmo of Europe. For Klarna, the acquisition is about talent and not about Cookies’ money-transfer technology. The entire Cookies team, except for cofounder Krugljakow, will join Klarna and remain in Germany to become Klarna’s new Berlin office.

In August, we covered Cookies’ effort to change its business model into a messaging-based P2P payment service geared toward millennials. The messaging service included paymojis, emojis with special powers (such as a lightning bolt to make the payment send faster) that could be included alongside the payment. Regarding the transition, Cookies co-founder Cheloufi said, “I am thrilled to become part of Klarna together with our strong team and take on new innovative projects out of Berlin. For us, this is a unique chance to join Klarna and benefit from their wealth of expertise, tech and talent.”

Founded in 2005 in Stockholm, Klarna is headquartered in Ohio with offices in San Francisco, New York, Tel Aviv, and across Europe. The company demonstrated its online payment-processing service at FinovateSpring 2012. Recently, Klarna went live with SAP’s Smart Accounting for Financial InstrumentsSmart AFI—a solution that offers a centralized sub-ledger that integrates directly into a company’s accounting-documentation chain. In September, the company added American Express as a payment option at checkout.

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This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.