Stumbled across this article about fintech Klarna, which has been profitable every year since its founding in 2005, and yet posted its first ever loss of almost $100M in 2019.
So, what is Klarna?
Klarna is a European fintech start-up operating in the buy-now-pay-later space. I call it the “layaway space”. Essentially, users get to buy things now, take ownership of them, and set up small payment plans for them to pay them off over time.
and why is it relevant here?
There has been a bit of discussion of Afterpay (AFTPF) on these boards, which is a similar company based out of Australia. Several people, including myself, and I believe Saul, have taken small starter positions in Afterpay.
Part of the reason for Klarna’s loss is re-investment in company’s growth with the opening of a Berlin-based tech hub, and more importantly, a push into the U.S., where it envisions an IPO in the next year or so. Because they plan on issuing an IPO on the U.S. exchanges, they want to first have a solid footing here so both customers and investors get to know who they are.
It will be very interesting to watch these two companies battle it out here in the U.S., especially since they’re not only both non-US companies, but they’re from opposite sides of the planet as well! I expect the cultural differences between the 3 different countries involved to play a significant part in their success or failure. Who “gets” the U.S. markets better? Europeans or Australians? How will their apps, and approaches to the same layaway market differ based on their own cultures and how the U.S. financial culture play into that?