Pre-IPO Pedia | Eyes up IPO, European largest unicorn Klarna worth $45.6B

Nowadays, almost everyone has a mobile device, more and more people use mobile payment, and the global mobile payment market is growing rapidly. With the development of the industry, the global mobile payment market is gradually dominated by major technology companies. European market belongs to Klarna.

According to the FinTech Report 2021 – Digital Payments released by Statista, the size of the global digital payment market will be $5,474.6 billion in 2020, and will reach $1,0520.3 billion in 2025, with a compound annual growth rate of 14%.

There are great differences in the development level of mobile payment in different regions. In 2020, the world's largest digital payment market was China, with a digital payment scale of 2496.5 billion US dollars, accounting for 45.6%, followed by the United States.

The three founders Sebastian Siemiatkowski, Niklas Adalberth and Victor Jacobsson participated in the Stockholm School of Economics annual entrepreneurship award in 2005 with their idea, however their idea was not enthusiastically received and their entry was among the last in the competition.

Despite this, they decided to found Klarna in mid-2005 and started operations in Sweden. An angel investor and previous Erlang Systems sales manager, Jane Walerud, invested in their company and put them in contact with a team of programmers to help them build the platform.

Klarna provides payment processing services for the e-commerce industry, managing store claims and customer payments. Klarna is the world's largest "Buy Now Pay Later" (BNPL) service provider.

Klarna supports direct payment, buy now, pay later, and installment payment. It serves more than 85 million consumers with an average daily transaction volume of more than 1 million, and has processed more than 315 million transactions. In 2020, Klarna entered the Australian market to further expand its global business.

Klarna now operates in 17 countries around the world, including Austria, the UK, Finland, Germany, the Netherlands, Norway, Sweden and Denmark (currently supported by Payssion).Klarna is currently applicable to e-commerce, games, virtual and software.

Since April 2019, Klarna has conducted a total of 14 major rounds of financing. The main investors are BlackRock, Softbank, Ant Group, Sequoia Capital, Visa, etc.

Several financing projects that are highly concerned by the market.

On April 8, 2019, Klarna received $93 million from Sequoia Capital and H&M.

On August 6, 2019, Klarna received $460 million from Dragoneer and BlackRock.

On March 4, 2020, Klarna received a strategic investment from Ant Group.

On March 1, 2021, Klarna received $1 billion from Sequoia Capital and Visa.

On June 10, 2021, Klarna received $639 million led by Softbank Fund.

Klarna's valuation has beensteadily risingsince its foundation. In 2021, it was valued at $45.6 billion after a $639 million capital injection from venture capital institutions such as Softbank.

Klarna is one of the top five unicorns in the world and the largest unicorn in Europe. It is highly sought after by investment institutions and has carried out seven rounds of financing last year alone.

According to the company's official website, Klarna currently has 100 million active users worldwide.

Klarna's income comes from three main sources:

Transaction fees charged to merchants, transaction fees charged to users, interest charged to users,

Its main capital cost also has three aspects:

The cost of capital, the amount of money needed to issue credit

Receipt costs, which are the costs of processing credit cards and bank transfers

Cost of default, i.e. bad debt, Klarna provides bad debt insurance for merchant

In 2019, Klarna's revenue reached $740 million, up 32% year-on-year.

In 2020, its revenue reached a record $1.2 billion.

However, as Klarna continues to expand internationally, its operating costs are also increasing, so its losses are also increasing. According to the operating report issued by Klarna, its net loss in 2020 is about $109.2 million.

There are a lot of opinions about the way Klarna choose to go public. According to media reports, Klarna had completed the last round of financing before listing. Klarna had considered to list in London, though the regulatory issues involved could prompt a switch to New York.

Some professionals estimate that Klarna will complete its IPO or go public through SPAC. But its CEO Sebastian Siemiatkowski has said that Klarna will hardly adopt SPAC.

Because Klarna has already raised enough money through several rounds of financing, some investors have speculated that Klarna may take a DPO approach, listing directly on the public market without underwriters or raising new capital.

Judging by the rumors, ineither way, Klarna should be close to going public. Investors is eagerly awaiting its public debut. BNPL is an interesting field with a lot of competition, and the next few years will be very interesting.

Mooers, Have you ever used Klarna? As the scale of online payment is growing day by day, are you optimistic about its development prospects? Would you invest in Europe's biggest unicorn if it goes public? Follow me to join the latest discussion!