Klarna Group plc
Financial Technology / Digital Banking / Buy NowFounded 2005- Updated June 2026
Reviewed by Swet Parvadiya
Last reviewed: June 2026
CorpDigest
Klarna Group plc
Company History
Founded 2005 in London, United Kingdom
Last reviewed: 2026-06-10 · By Swet Parvadiya
In 2005, Sebastian Siemiatkowski pitched the idea that became Klarna at a Stockholm School of Economics entrepreneurship competition. The judges ranked it last. He founded it anyway with Niklas Adalberth and Victor Jacobsson, operating first under the name Kreditor.
The original product was a single-click invoice payment system for Swedish e-commerce — buy the item, receive it, then pay the invoice within 14 days. The credit risk sat entirely with Klarna. The bet was that most consumers would pay, and that merchants would accept a 3-6% fee in exchange for not managing their own collections. Both bets proved correct.
The company rebranded to Klarna in 2009 and expanded the product beyond invoicing to include installment payments and direct bank transfers. The 2013 acquisition of SOFORT, the German direct bank transfer service, gave Klarna immediate penetration into German-speaking markets where consumer credit skepticism made invoice products more appealing than card-based lending.
The 2021 peak valuation of $45.6 billion reflected pandemic-era e-commerce acceleration and a market that priced BNPL growth as if the credit cycle had been repealed. It had not been. By 2022, rising interest rates increased Klarna's cost of funding while consumer credit quality deteriorated simultaneously. The company cut 40% of its workforce in a single announcement — a move that shocked the European startup ecosystem but ultimately preserved the balance sheet. Klarna emerged from that contraction with a smaller cost base, a banking license, and a path to profitability that the company validated with $21 million in net income in fiscal year 2025.
Sebastian Siemiatkowski has served as the Chief Executive Officer of Klarna since its inception, guiding the company from a dorm-room invoice factoring startup to a global digital bank processing over $127 billion in annual volume. Known for his intense focus on unit economics and operational efficiency, Siemiatkowski led the company through the catastrophic 2022 valuation crash, making the unpopular but necessary decision to reduce the workforce by 40% to ensure the company's survival. He is a vocal advocate for the integration of artificial intelligence in financial services, famously claiming that AI could replace the majority of the company's customer service roles, though he later demonstrated operational flexibility by rehiring human agents when consumer data dictated the need for a hybrid approach. Siemiatkowski remains the public face of Klarna, frequently engaging with regulators and the media to defend the Buy Now, Pay Later model against accusations of encouraging reckless consumer debt.
Niklas Adalberth co-founded Klarna in 2005 alongside Sebastian Siemiatkowski and Victor Jacobsson, serving as the company's Deputy CEO and driving its early international expansion into Germany and the United Kingdom. After leaving Klarna in 2016, Adalberth founded Norrsken Foundation, the world's largest foundation dedicated to supporting impact-driven entrepreneurs, leveraging the massive wealth generated from his Klarna stock options. His tenure at Klarna was marked by a relentless focus on regulatory compliance and banking partnerships, recognizing early that the company would eventually need to operate as a licensed financial institution to survive long-term. Adalberth's legacy at Klarna is defined by his ability to bridge the gap between aggressive Silicon Valley-style growth tactics and the conservative, risk-averse nature of European financial regulation.
Victor Jacobsson co-founded Klarna in 2005, bringing the technical expertise required to build the complex financial infrastructure that underpinned the company's invoice factoring model. As the early CTO, Jacobsson was responsible for creating the proprietary underwriting algorithms that analyzed thousands of data points to assess consumer creditworthiness in milliseconds, a technological advantage that allowed Klarna to offer instant credit decisions at a time when traditional banks required days of processing. He left the company in 2010 to pursue other ventures, but his foundational work on the risk engine remains the core of Klarna's competitive advantage, enabling the company to process millions of transactions daily with industry-leading fraud detection rates. Jacobsson's contribution established Klarna as a technology-first financial institution, rather than a traditional bank with a website.
Sebastian Siemiatkowski, Niklas Adalberth, and Victor Jacobsson found the company in Stockholm, initially focusing on invoice factoring for e-commerce merchants.
The company rebrands from Kreditor to Klarna and launches its revolutionary direct billing product, allowing Swedish consumers to receive goods before paying, driving a 300% increase in merchant signups.
Klarna acquires German payment provider SOFORT for an undisclosed sum, instantly establishing a dominant market share in the lucrative DACH (Germany, Austria, Switzerland) region and processing over $11 billion in annual volume.
Klarna officially launches its Buy Now, Pay Later services in the United States, partnering with major retailers like Macy's and Saks Fifth Avenue, marking its first major expansion outside of Europe.
Following a massive surge in e-commerce during the pandemic, Klarna raises a late-stage funding round that values the company at $45.6 billion, making it the most valuable fintech startup in Europe.
Amid a global tech sell-off and rising interest rates, Klarna's valuation plummets 85% to $6.7 billion in a down-round, forcing the company to lay off 10% of its global workforce, approximately 700 employees.
Klarna reports its first annual net profit of $21 million for the fiscal year 2024, a 109% improvement from 2023, driven by aggressive cost-cutting and a 40% reduction in total headcount since 2022.
Klarna completes its highly anticipated initial public offering on the New York Stock Exchange under the ticker KLAR, pricing at $37 per share and debuting at $45.82, valuing the company at over $17 billion.
Klarna acquired German payment provider SOFORT to instantly establish a dominant market share in the lucrative DACH region, leveraging SOFORT's existing network of bank transfer integrations to bypass the need for building local partnerships from scratch.
Klarna acquired the Swedish price comparison and shopping discovery app Wallet to expand its consumer-facing brand beyond the checkout experience and build a dedicated shopping destination within the Klarna app.
Klarna was created in Stockholm in 2005 to let shoppers buy first and pay after delivery, removing the friction of entering card details at online checkout. That pay-after-delivery idea became the foundation of the modern Buy Now, Pay Later category, and Klarna expanded it across the Nordics before entering the UK and Germany in 2014 and the United States in 2019.
When central banks began their most aggressive rate-hiking cycle in four decades in 2022, Klarna's borrowing costs multiplied roughly fivefold and its debt-funded expansion model became unsustainable. The company pivoted to a strict focus on unit economics and deposit-funded lending, a discipline that produced its first annual net profit of $21 million in 2024 after years of heavy losses.
Klarna's valuation fell from a peak of $45.6 billion in a June 2021 funding round to just $6.7 billion in a July 2022 down-round, a drop of about 85% in roughly fourteen months. The emergency raise diluted early employees and investors and became one of the defining moments of the broader fintech correction.
Klarna cut about 10% of its staff in May 2022 and roughly another 10% later that year, reducing global headcount from over 5,500 toward 3,000 employees. The layoffs sharply lowered the company's operating burn rate and were central to reaching profitability in 2024.
Klarna secured a full banking license from Swedish regulators in 2017, operating as Klarna Bank AB and gaining the ability to take consumer deposits. That status let the company fund its loan book with retail deposits rather than relying solely on wholesale debt, reshaping it from a payments startup into a regulated deposit-taking institution.