The Swedish fintech startup Klarna has just raised another $460m in a new funding round, led by the investment firm Dragoneer, at the post-money valuation of $5.5bn.
According to the company, it will use the investment to strengthen its position in the US.
Klarna isn’t the only European neo bank to have set its sights on the US, but unlike N26, Monzo and Revolut, Klarna has already been at it for the last four years.
Progress in the US hasn’t been easy for the Swedish startup and may have some lessons from the other European fintech’s trying their luck across the pond. In spring 2015, was Klarna ready for the expansion into the US, however, it came with some challenges.
Erik Engellau-Nilsson, now chief executive at Norrsken, was at the time setting up the business for Klarna in the US. He left Klarna in spring 2016 but has later looked back at the mistakes that were made.
“When we expanded with Klarna and tried to find local staff straight away, we didn’t have the brand name to attract the best candidates. And the second mistake was to believe that putting that person in Stockholm for a couple of weeks would teach them the company culture and how we work. That rarely works”, Engellau-Nilsson told Sifted in June.
Like Klarna, N26 chose a long-time member of staff, Nicolas Kopp, to head up its US team. And Monzo too has sent Oliver Beattie, previously head of engineering, over to Los Angeles to build out its team.
Klarna continued having problems in the US in 2017 when the company at the beginning of the year laid off half its American workforce. According to Di Digital, Klarna’s goal was to show around €100m of revenue in the US in 2017, but missed its target and didn’t reach a fraction of that.
Klarna has since then managed much better. With marketing campaigns with Snoop Dogg (also an investor) and having found a way to educate the market on the advantages of non-credit cards, Klarna is growing with 6m new customers annually in the US, according to the company.
According to the Swedish startup, founded in 2005, the momentum of acquisition continues and in July a record number of new merchants signed with Klarna in the US. Klarna is now serving over 60 million consumers, 130,000 merchants partners, 1m transactions daily and is in sight of a $1 billion annual revenue.
The funding round, which makes Klarna the most valued fintech in Europe, was led by San Francisco based investment firm Dragoneer, previously invested in Spotify. Other investors in the round include Commonwealth Bank of Australia, HMI Capital LLC, Merian Chrysalis Investment Company Limited, Swedish pension fund AP1, IPGL, IVP and funds and accounts managed by BlackRock.