Buy now, pay later companies such as Klarna and Block’s Afterpay may face tougher rules in the UK
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LONDON — More startups have spun out of Swedish digital payments company Klarna than any other fintech unicorn in Europe, according to a new report from venture capital firm Accel.
Accel’s “Fintech Founder Factory” report shows that Klarna alumni have founded a total of 62 new startups, including Swedish loan technology company Anyfin, regulatory compliance platform Bits Technology, and artificial intelligence-driven coding platform Pretzel AI.
This is higher than any other VC-funded fintech startup in the region valued at $1 billion or more.
These include digital banking app Revolut, whose former employees have founded 49 startups. It also includes money transfer app Wise and online-only bank N26, whose former employees have each founded 33 companies, according to Accel.
“Founder Factory”
Accel calls these companies “founder factories” because they have become hotbeds of talent who often go on to found their own companies.
“We now have a long list of large, durable, successful companies in different ecosystems across Europe – including London, Berlin and Stockholm – that are already producing interesting results,” Accel partner Luca Bocchio told CNBC.
A report released by Accel ahead of a fintech event in London on Wednesday showed that 82 of the 98 venture capital-backed fintech unicorns in Europe and Israel have spawned 635 new technology startups.
The data also takes into account Israeli fintech unicorns. However, most of the largest fintech founding factories are from Europe.
Klarna layoffs
Klarna has made headlines in recent months for comments by Sebastian Siemiatkowski, founder and chief executive of the buy now, pay later giant, about using artificial intelligence to help reduce headcount.
Klarna currently has a company-wide hiring freeze and cut its headcount by about 24% to 3,800 in August. Siemiatkowski said Klarna was able to reduce its headcount thanks to the implementation of generative artificial intelligence.
He hopes to reduce Klarna’s headcount further to 2,000, but has not yet specified a timeframe for achieving this goal.
Klarna’s ability to incubate so many new startups is a testament to Accel’s Bocchio said the company’s layoffs may focus on using artificial intelligence to increase employee productivity and reduce overall hiring.
When asked why Klarna topped the ranking of European fintech founding factories, Bocchio said: “Klarna is an organization that is maturing.”
Borgio added that this means the company is currently “well-positioned to produce interesting founders” – both because of its size and longevity, and because of the “interesting” way its employees work internally .
Live close to home
Another noteworthy finding in the Accel report is that most companies founded by former fintech unicorn employees tend to be based in the cities and centers of their employers.
Nearly two-thirds (61%) of companies founded by former fintech unicorn employees were founded in the same city as the unicorn, according to Accel.
Bocchio said that from a broader perspective, the figures showed that Europe was experiencing a “flywheel effect” as tech companies grew in size and employees could learn from them and leave to build their own businesses.
“I think the flywheel is spinning because the talent remains within the flywheel. The talent is not going anywhere.” This “speaks to the maturity and appetite of individuals in the European fintech founder factory,” he said. “We expect this trend to continue. I don’t see any reason why it should stop.”
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