But the biggest investors and venture capital funds were in the US, and over time that pull of its markets became irresistible. Spotify listed in New York in 2018. Now, Klarna is looking at something similar, filing listing documents in the US last week. Bankers and investors talk of a possible listing in the first half of next year that would value the company at up to $20bn. That would be a far cry from the $46bn Klarna was valued at in 2021 but better than the $6.7bn it achieved a year later in its last official fundraising round.
There is just no question: the US has the customers, the market; it has the VC funds; it has the investors. If you are going to list, why would you choose Europe today?asks one of the continent’s biggest industrialists, one of whose companies is examining a potential move from Europe to the US to try to boost its flagging share price.
That underscores the scale of the challenge for European policymakers: it is not just simply about developing a better financing ecosystem for start-ups of all sizes, there is also a need to properly complete the EU single market in so many areas from services to capital markets. Until it does, more like Klarna are likely to choose the US.
Richard Milne
This article is a good example of what happens when you start with a predefined notion (the EU is hopelessly behind and absolutely must chase the American VC-centric startup model) and force facts to fit the desired narrative (amusing to see the author being vigorously slammed in the comments).
To call Klarna a rare tech triumph
is a gross exaggeration bordering on outright falsehood. Real US tech giants had at least one market-defining innovation (Apple with the iPhone, Google the search engine, Facebook the social network, Amazon the digital marketplace, Netflix the streaming model); to the best of my knowledge, Klarna is for all intents and purposes a credit-card service. Hardly an innovative idea; large banks offered similar comparable for decades and BNPL startups are sprouting up everywhere, which makes it difficult to differentiate in the market and expand at the scale that tech giants have achieved.
Klarna is clearly experiencing issues already, as its private market valuation has gone through a significant contraction. It was fined by the Swedish financial regulator for breaching anti-money laundering regulations – further proof that authorities are treating it as a classic credit card operation. The business itself is vulnerable to interest rate hikes and recessions when the rate of default on credit card debts rises sharply.
Klarna did embraced the overhyped narrative of the moment, AI, proudly announcing that it stopped all hiring a year ago to replace workers with AI, and how its headcount fell 22% to 3,500. Not sure how they plan on collecting outstanding debts with less human operators – or how a middling business such as this would become a flagship of European stock markets as the author above seems to think.
Meanwhile in the real world, another article in Financial Times informs us that the Frankfurt’s Dax outperformed both the German economy and benchmarks in France and the UK in 2024. Ultimately, where companies list nowadays is somewhat irrelevant, as the larger they are, the more likely their revenues and operations are distributed across several countries and continents. More important is where companies hire people and pay taxes, thus promoting local growth. Klarna replacing jobs with AI to boost its upcoming listing is not a model I for one would celebrate, as it promotes capital accumulation for the already rich at the expense of everyone else.
The Dax’s performance
Rafe Uddin & Mari Novikhas been a surprise, said Timothy Lewis, a portfolio manager at JPMorgan Asset Management, andserves as a great example of the adage that stock market and economic performance are not one and the same.
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