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Swedish Payments Giant Klarna acquires Sofort, Deal Valued at around $150 Million

German payment (gateways) market leader Sofort has been acquired by Swedish rival payments firm, Klarna for a sum of around $150 Million according to Techcrunch. According to Klarna, the combined entity would be able to tap into the European $100 Billion e-commerce market with their payment systems. With this combination, the two companies will have over 25 Million users and partnerships with more than 50% of Germany’s online merchants.

Klarna was co-founded in February 2005 by Sebastian Siemiatkowski (CEO), Victor Jacobsson and Niklas Adalberth (Deputy CEO). The company has raised an astounding $250 Mn through investors including Sequoia Capital, Jane Walerud, Investment AB, General Atlantic, Digital Sky Technologies and QED Investors.

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About Klarna’s platform:

  • Klarna enables customers to pay for the products they purchase online, after receiving them.
  • Its network possesses a complicated set of anti-fraud technologies that can help the company assume the credit and financial risks.
  • Merchants are charged a small fee in turn for Klarna assuming all the credit risk for any consumer’s that fail to pay.
  • Klarna’s complex system analyzes customers’ behavior in order to detect fraud. For example multiple or late night purchases are considered more suspicious than those made for single items or in the morning.
  • They also have a one-click purchase option which enables merchants to see on average a 10-30% uptick in sales.

The company is really about two things: safety and simplicity. We have separated buying from paying, said Klarna CEO, Sebastian Siemiatkowski. We have proven the business model works and we have seen high growth in existing markets but we think there is a huge potential globally for these kinds of services.

Sofort is high-test additive that puts even more pep in Klarna’s engine and will help the company accelerate its business in Germany, stated Michael Moritz of Sequoia Capital. Klarna is buying Sofort from Reimann Investors, their majority shareholder. The combined network of Klarna and Sofort will cover 43,000 merchants over 14 countries. They will have around 1000 employees in total. Klarna was valued at nearly $1 Bn in its last fundraising 2 years back.</iframe>


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