The article first appeared on the Tech Crunch.
Klarna, the payments startup out of Sweden that helps online shoppers arrange for financing at the point of sale, has picked up another strategic investor: fashion retailer H&M is taking a $20 million stake in the business, and with it, the two plan to build an “omni-channel” payments service across H&M’s physical stores — which span 4,800 stores in 70 markets — as well as its online storefronts.
Klarna says the deal will cover “frictionless” in-store, mobile and online payments across the company’s whole footprint, a better delivery and return process, and more flexible payment options, including “try before you buy” pay later services, to be delivered through H&M’s app and its Club loyalty program. The first phase of the partnership will go live in 2019 in H&M’s home market of Sweden before a global roll out.
The companies are not disclosing the valuation with this investment, but a source close to the deal says that the $20 million equates to “much less than one percent of the company.” For some context, Klarna was last valued at $2.5 billion in 2017, a year when it made a series of investment announcements. They included a $225 million stake from Klarna’s first fashion world investor, Anders Holch Povlsen (owner of fashion conglomerate Bestseller); a strategic stake from credit card giant Visa; and a $250 million investment from PE firm Permira. (Previous investors have included Sequoia, Northzone and IVP.)
We’ve heard that Klarna has also been eyeing up an IPO as a further liquidity event although a spokesperson declined to comment on this when asked today.
For H&M, the move aims to give the company a stronger push into digital sales. Some high-street retailers have made online, and specifically mobile, a cornerstone of their sales — and there are, indeed, a number of businesses that have built presences only online such as Farfetch, Matches, and ASOS.
“We are impressed with what Klarna has achieved to date and now we will work together to elevate the modern shopping experience,” said Karl-Johan Persson, CEO H&M, in a statement. “This strategic partnership between H&M group and Klarna is based on a joint relentless focus on creating great customer experiences.”
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