Startups

Fashion Tycoon Invests $225M In Klarna, Swedish Payments Unicorn

Klarna, the Swedish startup that lets shoppers pay for goods after they are delivered instead of before (and incrementally over time if they wish), has picked up a new investor that catapults its valuation to over $2.25 billion.

Brightfolk, the fashion firm owned by Danish entrepreneur Anders Holch Povlsen, has bought shares of the Swedish payments unicorn from existing investors General Atlantic, DST Global and Klarna Co-Founder Niklas Adalberth, though all of the above retain stakes as Klarna shareholders.

Along with Brightfolk, Povlsen owns Bestseller, a leading fashion company with brick-and-mortar and digital brands that include Jack & Jones, Vero Moda, Only and Selected. Bestseller has been a partner of Klarna for a number of years, giving Povlsen firsthand insight into what the finance startup has to offer.

In the strategic equity move, Brightfolk has bought up at least 10 percent of Klarna, making it a “qualified owner.” Although Klarna is not commenting on the specifics, TechCrunch reported that Brightfolk’s stake is valued at more than $225 million since Klarna ramped up its valuation.

Founded in 2005, the finance startup has (perhaps uniquely) already turned a profit. What sets it apart from similar companies like PayPal (publicly traded with a market cap near $64 billion) and Stripe ($9 billion) is that it offers more than payment basics; it offers convenient alternative financing options on its partner third-party websites and apps, including payments on delivery and over time.

Klarna has processed 60 million users’ transactions from 70,000 merchants across 18 countries in Europe and North America. That breaks down to more than 400,000 transactions a day and represents 50 percent year-over-year growth from 2016. The company made $318 million USD in 2015.

Klarna is coming off a particularly strong quarter that saw 37 percent transactions growth, 39 percent volume growth and the addition of 17,000 new merchants.

The finance startup recently took a $5.2 million investment from Creandum and is allegedly looking to raise another $57 million to help finance its acquisition of BillPay, a German competitor of PayPal, which Klarna bought from Wonga in February for $75 million.

It has also applied to rebrand itself as Klarna Bank following its 2015 application for a banking license, with an eye to becoming an all-in-one digital wallet for online and ePayments, including through a Klarna app.

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PYMNTS STUDY: THE CROSS-BORDER MERCHANT FRICTION INDEX – JUNE 2020

The PYMNTS Cross-Border Merchant Friction Index analyzes the key friction points experienced by consumers browsing, shopping and paying for purchases on international eCommerce sites. PYMNTS examined the checkout processes of 266 B2B and B2C eCommerce sites across 12 industries and operating from locations across Europe and the United States to provide a comprehensive overview of their checkout offerings.

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