Klarna Bank AB

Klarna Bank AB

Klarna Bank AB was founded in Stockholm by Sebastian Siemiatkowski, Niklas Adalberth, and Victor Jacobsson in 2005 after they won a school competition with their payment solution. Siemiatkowski has remained CEO throughout, raising over $3.7B in equity from investors including Sequoia Capital, Dragoneer, and SoftBank. The firm transitioned from a payment gateway to a direct consumer lender. Klarna's strategy blends underwriting consumer credit for point-of-sale purchases, operating its own payment processing infrastructure, and using AI/ML to manage risk across 45 markets. The firm derives revenue from merchant transaction fees (2-3% per purchase) and interest on installment loans. Its balance sheet provides the credit for most BNPL originations, though it also partners with banks for some regions and holds a full Swedish banking license. The merchant network spans over 250,000 retailers, including H&M, Nike, and Sephora. The company's valuation peaked at $45.6B in June 2021 during a SoftBank-led round but fell to $6.7B by mid-2022 during tech repricing (per Bloomberg, 2022). Klarna employs over 3,000 people across offices in Stockholm, San Francisco, New York, London, and Berlin. In 2023, the firm reported its first monthly profit since 2019 and later announced a $10B valuation raise in 2024 from Sequoia and others (per the firm's official communication, 2024). Klarna's structure as a regulated bank distinguishes it from unregulated BNPL peers. Holding a Swedish banking license allows it to originate credit directly and potentially offer deposit accounts—a regulatory moat that limits competition and changes its risk profile relative to US-focused lenders like Affirm or Afterpay.