Located in Sweden Klarna is the largest privately held fintech company in Europe, with 4,000 employees and a $31 billion valuation boosted by investors such as Softbank, General Atlantic, and BlackRock. The company has grown to be elephantine in such a short period of time by allowing customers to make purchases and pay later, while earning revenue by charging merchants to use Klarna’s payment technology. Klarna today announced the addition of a new investor: rapper, designer, and producer A$AP Rocky.
“It’s a revolutionary approach to the credit system,” Rocky (real name Rakim Mayers), 32, says. “It promotes financial literacy.”
Along with the company’s rapid growth, Rocky was inspired to invest in Klarna by his own Harlem experiences. He highlights the difficulties that low-income individuals face when it comes to making payments, particularly on interest-bearing student loans. “You’re committing financial suicide,” he says. “There is no system in place to assist us in dealing with student loans, the IRS, banking, or credit.” He refers to Klarna as a global “layaway plan.”
This is a new chapter in the performer’s “funny history” with Sweden, in Rocky’s words. Rocky was returned to the United States in August 2019 after the country held him in pretrial detention — on an assault charge — following a post-concert brawl in Stockholm. Rocky’s case sparked international outrage, which was fueled in part by then-President Donald Trump, who took to Twitter to call for the rapper’s release and return to the United States.
Rocky (who was featured on the 2016 Forbes 30 Under 30 cover) will now curate upcycled and vintage fashion experiences for the Klarna smartphone app, reclaiming his relationship with Sweden as an investor in one of the country’s most significant companies.
Bringing Rocky to the cap table is a strategic brand move for Klarna’s billionaire CEO and cofounder Sebastian Siemiatkowski. Klarna prides itself on being the anti-bank bank: its logo is bubblegum pink, and the company ran advertisements in major cities featuring investor Snoop Dogg surrounded by Afghan Hounds. “We are a very diverse group of people with over 50 nationalities represented, speaking multiple languages and approaching business in very different ways,” Siemiatkowski explains. “We wanted our brand to exemplify this—to exemplify approachability and accessibility. We also wanted to inject some lightheartedness into it.”
The company’s trajectory has been far from tranquil. Revenue increased 37% from 2019 to 2020 to $1.2 billion, with the majority of revenue coming from merchant fees of between 3% and 7%. Klarna currently has over 90 million active users worldwide who conduct an average of two million transactions per day with over 250,000 merchants including Nike, Amazon, and Sephora.
However, critics claim that buy now, pay later encourages overspending. “A decade after the financial crisis, a new generation—many of whom were still in primary school during the previous credit crunch—is being courted by new types of lenders who are rewriting the language of debt for the Instagram era,” the Financial Times wrote about Klarna in 2018.
The company maintains that it is a counter-measure to the credit system. According to a Klarna representative, “each new transaction is evaluated before approval, and we impose spending limits on shoppers who use our services.” Each time a customer uses Klarna, we reassess their ability to repay and determine whether the payment method they wish to use is appropriate for them at the time.” Additionally, they point out that customers are prohibited from using Klarna until their outstanding balance is paid. Additionally, unlike creditors, the company rarely charges interest to customers.
Rocky believes Klarna is his best investment yet for all of these reasons. “I’m very hands-on,” Rocky explains. “It’s self-evident.”