In the United Kingdom, buy now, pay later companies such as Klarna and Block’s Afterpay might soon face stricter regulations. According to a recent report from venture capital firm Accel, Klarna has spun off more startups than any other financial technology unicorn in Europe. The report, titled “Fintech Founder Factory,” highlights that Klarna alumni have established 62 new startups, including Swedish lending technology company Anyfin, regulatory compliance platform Bits Technology, and AI-powered coding platform Pretzel AI. This figure surpasses other notable fintech startups valued at $1 billion or more in the region.
Former employees of the digital banking app Revolut have created 49 startups, while those from money transfer app Wise and online-only bank N26 have each started 33 companies, as per Accel’s data.
Accel describes these firms as “founder factories,” suggesting they are environments that nurture talent, leading to the creation of new companies. Luca Bocchio, a partner at Accel, stated that there is now a significant list of large, successful companies in Europe, particularly in hubs like London, Berlin, and Stockholm, generating noteworthy outcomes. The report indicates that 98 venture-backed fintech unicorns in Europe and Israel have led to the formation of 635 new tech-enabled startups, with most “founder factories” arising from Europe.
Klarna has been in the spotlight recently due to comments from its CEO, Sebastian Siemiatkowski, about utilizing artificial intelligence to reduce workforce numbers. The company, which has implemented a hiring freeze, reduced its employee count by about 24% to 3,800 in August. Siemiatkowski aims to further decrease the headcount to 2,000, although no timeline has been given. According to Bocchio, Klarna’s ability to spin off numerous startups is not attributed to company cutbacks or its focus on AI; rather, Bocchio suggests Klarna has matured into an organization capable of fostering innovative founders due to its size and longevity.
The report also highlights that most startups initiated by former fintech unicorn employees typically emerge in the same cities where their parent companies were founded. Accel found that 61% of these startups originated in the same city as the unicorn. Bocchio describes this phenomenon as a “flywheel effect,” where European tech firms reach a size that enables employees to leverage their experience and establish their ventures. He anticipates this trend will persist, pointing to the maturity and ambition of individuals within Europe’s fintech sector.