The Swedish success story Klarna is well on its way to making the online world buyable. Founded in 2005 the company is already established in 6 countries and has grown by at least 100% every year since their start. Norway, Finland, Denmark, Germany and Holland conquered in half a decade, and the publicity surrounding them has been immense. Meet founder and Chief Business Developer (CBDO) Victor Jacobsson and learn more about their plans in the US and the art of attracting investors.
For the few of you who have missed this wonder, Klarna offers simple and safe payment solutions for online shoppers and simultaneously increase sales for online retailers. Simply put the service lets the consumer pay online after he/she have received their product. In the meantime Klarna secures the payment to the retailer.
The company currently has more than 600 employees in northernEurope. Only settling for the best system developers and engineers, they are now struggling to find the knowledge and competency they need to continue growing at their current rate. Their quest for the best led them to acquire a company inIsraelwhere they now have a fully developed research and development organization. Relations from the acquisition in the Middle East inevitably led them onto Silicon Valley, where they now recently have established their second development center, all in order to supply the company in Stockholm with necessary brain power to make a growing part of the online world buyable.
Being a financial company, essentially offering credit to customers, Swedish law requires a capital cover rate of 10%, making the balance sheet of this highly expanding company, an apparent issue for continued growth. “We have made profit ever since December of 2005. Taking in investors was rather a question of growing fast or growing faster”, says Victor Jacobsson. Ever since meeting Mats Qviberg, from the Swedish investment company Öresund, in the incubator stage of their venture, the three founders of Klarna have been blessed with good investor relations. Initially they offered equity in return for cash but also received the services of a business angel, for example finding new developers. The initial investment from Öresund suited the entrepreneurs well due to the investment company’s good reputation, combined with their apolitical nature.
“Investors all seem to know each other”, says Victor. “Either they talk to each other and share their insights, or they all get their information from the same place, or both. I would like to think that strategic PR and continuous contact with journalists is a major part of attracting investors. Good news travels fast, and blogs, industry magazines, awards, they all reach investors. Once we had made a name for ourselves, we had over 30 influential investors who were interested.”
“Important to know when you are dealing with investors is that you are dealing with people”, says Victor. “You have to agree and sympathize with the person you are about to partner with, and that person has the share your view of the company and where it is going.” Further he encourages the entrepreneur to take references on your investor and be sure to agree in detail what the money is for, before agreeing to anything.
“At Klarna we were very clear on that no investor would get any special treatment. Something that we otherwise believed could possibly lead to troubling and varying incentives among the investors. The demands we put on our investments however was partly possibly because of our strong financial position and our track record,” continues Victor.
With present board members such as Eva Cederbalk, SBAB, Eurocard and Netgiro International, SEB and If, Michael Moritz, Partner in Sequoia Capital, and Klaus Hommels, owner of the Swiss Hommels Holding, and investors such as Sequouia, DST Global and general Atltantic, Klarna not only has the necessary resources to keep the balance sheet growing, but also an enormous amount of knowledge and contacts. Therefore Victor is not the least bit concerned about their establishment in Silicon Valley.
“We do want to reach out to the Swedish-American Chambers of Commerce for help with the U.S. government in for example Visa administration for our mobile employees, even though we have secured a great network through our investors”, says Victor Jacobsson.
On the question of whether they plan on entering theU.S.with a sales office anytime soon, Victor comments that theU.S.is a huge and extremely diverse market that would acquire more attention than they can offer right now. They are presently focusing onEuropewhere there are still major opportunities to dig into.
To learn from the memorizers go to Klarna.com