China’s Ant Financial Services Group has acquired a minority stake of Klarna, Europe’s most valuable fintech startup.
As reported by Reuters on Wednesday, the Chinese giant has obtained a stake of less than 1 percent made up of existing and new shares.
Though neither of the companies officially disclosed the terms of the deals, the anonymous sources of the publication revealed that the investment was made at a “slight uptick” from the $460 million funding round last August.
Founded in 2005, the Swedish startup offers “buy now, pay later” services on e-commerce platforms, allowing consumers to buy online without having to provide payment details to the merchant they are buying from. Instead, Klarna pays for the order and sends an invoice to the original consumer, who then typically gets 14 to 30 days to settle.
According to Crunchbase, the startup raised a total of $1.7 billion over the years and is backed by American rapper Snoop Dogg, venture capital firm Sequoia Capital and also Australia’s biggest lender Commonwealth Bank of Australia, which invested $200 million in January.
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After the Dragoneer Investment Group-led financing round last August, the startup was valued at $5.5 billion.
China – a market with huge potential
Klarna is now focusing on expanding its services beyond Europe and entering new global markets. This tie between the two will also help the startup to tap the Chinese market, given that the country’s e-commerce giant Alibaba Group is an affiliate of Ant Financial.
“The current partnership where Klarna payments are available in AliExpress should now expand to new markets globally,” Sebastian Siemiatkowski, co-founder and CEO of Klarna, told Reuters.
“The U.S. is often used as a benchmark of what it means to be competitive but in my world, it just does not compare to the Chinese one…The level of innovation there is just tremendous, especially in-app retail and payments – they are the global pacesetters. For Klarna, there is much more opportunity in other markets.”