As Sebastian Siemiatkowski prepared for an initial public offering of the Swedish buy-now-pay-later fintech he had founded nearly two decades earlier, one thing stood in the Klarna CEO’s way: his co-founder.
last month Siemiatkowski finally resolved a year-long boardroom dispute, ousting the key board ally of the college friend with whom he formed the company, former CFO Victor Jacobsson.
Then on Wednesday, as Wall Street seethed in anticipation of a Donald Trump-era boom, Klarna revealed that it had filed the long-awaited IPO documents in the US.
Insiders, investors and bankers expect the company could reach a valuation of between $15 billion and $20 billion if it goes public. If Siemiatkowski can pull off the IPO, it would mark a redemption for the company model. fintech Boom and bust: In a funding round in 2021, Klarna was valued at up to $46 billion and then plummeted to $6.7 billion a year later.
Even at the lower end of the valuation range, the float would mint the 43-year-old former hamburger salesman, making him a billionaire. With a valuation of $20 billion, a personal stake of about 8 percent It would be worth about 1.6 billion dollars.
“That he can run the company for 20 years is very remarkable – turning what was initially a small Swedish company into a global business,” said Taavet Hinrikus, co-founder of London-listed fintech Wise. “It’s really good for the European ecosystem.”
Founded in 2005 after Siemiatkowski and two other student friends unsuccessfully pitched the idea in a university competition, Klarna pioneered the “buy now, pay later” model, which allows customers to delay payments or split them into installments.
During its first decade, the Stockholm-based company was regularly profitable, until it decided to embark on a costly foray into the United States.
The new strategy meant accepting large losses as the price for pursuing growth: and it was Siemiatkowski who pursued it.
Jacobsson, one of Klarna’s three co-founders, had already left in 2012, although he retained a stake managed through special purpose entities that Klarna estimates at between 4 and 9 percent. Jacobsson was followed three years later by the second co-founder, deputy CEO Niklas Adalberth, who sold out and chose a life of philanthropy.
While in the beginning “there was a lot of emphasis on not making Klarna a one-man show,” according to an early contributor, the company “has become a one-man show,” centered on Siemiatkowski.
Siemiatkowski, or “Seb,” has acquired celebrity status in the Swedish tech scene. He is frequently asked to appear on podcasts and television shows to discuss his journey and his family’s struggles, such as alcohol addiction and his father’s suicide.
He has expressed his opinion that he no longer drinks alcohol and spoke about his difficult upbringing in Uppsala, a medieval city 70 kilometers north of Stockholm. His parents, two academics who fled communist Poland before his birth in 1981, fell on hard times. His father became a taxi driver and his mother retired early due to illness.
“We spent an entire week eating meal after meal of Swedish pancakes, which are essentially nothing more than flour and milk,” Siemiatkowski was cited as a Sequoia Capital brochure says. “My parents couldn’t afford anything else.”
To fund Klarna’s global ambitions, the Swedish executive secured backing from prominent Silicon Valley investors including Sequoia Capital and Silver Lake, riding a wave of investor hype and cheap money. In 2021, a funding round led by SoftBank had given it the crown of Europe’s most valuable startup, and its “pay later” option, ubiquitous at online checkouts, was enjoying a pandemic-era boom.
Just over a year later, rapid increases in interest rates abruptly ended the fintech frenzy, and Klarna instead came under pressure to demonstrate its profit potential and offer its investors an exit.
Many venture capitalists have been unable to monetize their stakes in Klarna since the company began raising funds in the private market more than a decade ago, although there are exceptions. London-based investment firm Permira bought a 10 per cent stake for around $250 million in 2017 and is understood to have sold about half its stake since then for $1.7 billion.
As people who worked with him say, CEO Siemiatkowski has tried to bring the famous party culture of the early days of fintech to a more professional workplace. It has also sought to change the perception of a predatory business that relies on late fees to milk customers, pitching Klarna as a consumer-friendly “global payments network and AI-powered shopping assistant.”
His relationship with former Sequoia partner and Klarna president Michael Moritz has been fundamental in this. Current and former employees describe Siemiatkowski as “uncompromising” and “demanding.” But a former senior employee said Siemiatkowski became a better manager once under Moritz’s wing. Another described the duo as having a “father-son” relationship.
It was Moritz who helped bring Klarna to the brink of a U.S. IPO, and guided Siemiatkowski through a power struggle with Jacobsson and his board ally that threatened to derail any IPO.
The dispute centered on a fight between the two co-founders and the extent of Siemiatkowski’s influence over the company after an initial public offering. After securing the backing of the company’s major investors, it was the Klarna boss who emerged victorious in a shareholder vote last month.
“Sebastian is more powerful than ever. The opposition to him is being swept away little by little,” said a friend of his.
With the IPO in sight, the fintech, which is regulated like a bank, has signed a series of partnerships with merchants in the US to take on its main rival, Affirm. It also sold its instant payments business for $520 million in June and later struck a deal to offload £30 billion of its UK loans to hedge fund Elliott to boost its ability to make new loans.
Former executives say some strategic decisions have raised eyebrows, such as making a series of small acquisitions while the company was posting losses.
Klarna also faces an investigation by Swedish financial regulators into its financial crime and risk controls. A person close to the company said it had contacted the regulator about the preliminary findings.
Klarna declined to comment for this story.
“Sebastian rightly thinks that Klarna’s success is his job. But it has a history of investing in things that don’t work as well and have been quietly sold or closed,” said one former top executive.
And although Siemiatkowski won the boardroom fight, the dispute left a sour taste among some investors, a person close to the company said.
“There are many anti-Seb owners shaking their heads at the civil war,” said one shareholder. But they added: “Most of them just want the liquidity event to happen and stop scaring future investors.”