Once upon a time, you financed houses and cars. Then sofas and laptops. Now people are financing BURRITOS. Progress.

We don’t talk about “buying” things anymore - we talk about slicing them into four digestible chunks, like it’s some kind of calorie count for your bank balance. Why pay today when you can drag out the pain until payday (and then do it all again)?

Klarna has 11 million UK users and a 30% revenue jump this year. Their IPO was a rollercoaster - investors queued up like it was Glastonbury tickets, then bolted like someone had pulled the fire alarm. But the real story isn’t in the stock chart.

Klarna’s real play was cultural. Installments stopped being a rare financial tool and became the default way to spend. That shift - from exceptional to everyday - is what turned a payments company into a $45B phenomenon.

Critics call it clever but questionable. I call it predictable. Nobody’s forcing you to Klarna your takeaways. The real question is why investors kept funding it after it stopped making money.

Takeaways for founders, paid in full right here:

People don’t use Klarna for fun. It’s the cost of living crisis in action: wages frozen, bills constantly rising, savings accounts drained. Paying in installments has become less about convenience and more about getting by.

Founder, Sebastian Siemiatkowski capitalised on that. Klarna’s growth was rolled out in neat, calculated phases, each one nudging instalments a little further from sensible finance and a little closer to everyday reflex.

Each phase was a deliberate erosion of the old assumption that installments were for ‘rare’ or ‘big’ moments. Klarna reframed them as normal, everyday, even clever. Paying upfront became the weird thing to do - like insisting on cash at a self-checkout.

Investors weren’t naïve. They knew exactly what was happening and still wrote cheques. $4.2B poured in across 22 rounds. At the peak in 2021, Klarna hit a $45.6B valuation. Today it’s around $14.6B.

And yet, when the share price fell, the user behaviour didn’t. If anything, dependency deepened. For millions, Klarna is now the default. They have completely rewired spending culture.

Disturbing? True.

Impressive? Also true.

Here’s what makes Klarna the financial equivalent of reality TV:

The moat wasn’t margins or tech. It was psychology; the sleight of hand that turned “buy now, pay later” into “buy now, feel nothing”. The pain of spending got kicked down the road, leaving only the dopamine of the purchase in the moment. 

The word ‘exploitative’ gets thrown around. I’d, however, call it strategy.

Klarna has laid out the rules clearly: late fees capped at £5, zero interest, transparent terms. If people end up trapped, it’s not because they were misled, but because habit is the strongest cage and Klarna knew how to build it.

And that’s what really hooked investors. Once instalments became part of the way people shop, the game was won. Competitors could clone the model, but they were always too late. That cultural lock-in was worth more to investors than any single profit figure.

That’s why the capital kept flowing. Dependency is the ultimate product-market fit, and Klarna has engineered it better than anyone. Others tried BNPL, but none made it feel as normal, as ingrained, as inevitable. Investors backed the one that rewired consumer behaviour first.

Only one brave soul commented on my recent LinkedIn post (I’m guessing the rest were too busy Klarna-ing their Deliveroo).

The LinkedIn comment on this post compared Klarna to the AI bubble or the DoorDash bubble. 

Fair point - in all three cases, valuations shot up fast, IPOs were hyped and then reality hit with a crash.

But the difference is: when AI hype slows, people use it less. When food delivery gets too expensive, orders drop. With Klarna, the opposite happened. The valuation fell, but people carried on using it - in fact, usage grew.

That’s why Klarna stands out. The financial bubble burst, but the consumer habit didn’t. And that habit is what’s keeping investors interested.

You don’t need to copy Klarna to get funded. Trying to mimic BNPL’s psychology in a seed-stage startup is like demanding champagne service on a Ryanair flight: ambitious, but deeply out of touch.

Institutional money comes with institutional requirements. Klarna could pull it off because billions in venture capital were willing to back that kind of scale. That doesn’t translate to small businesses raising a few million… at least not until you’re playing in the same league.

I’ve seen plenty of £200k-£500k startups at FundOnion try - pet food is a common one. They’ll point to global stats like “pet ownership is up 8% worldwide” or “sustainable products are growing 4% a year”. 

The problem is, those numbers don’t tell an investor anything about your business. A couple in Hanoi buying a puppy won’t affect sales in Sheffield. Investors want to see your data: your margins, your growth, your traction, not Google trends.

Here’s where Klarna offers lessons you can use: not the psychology, but the discipline.

A) Focus on sustainable capital, not dependency: Klarna’s strength was showing behaviour that stuck. At your scale, the principle holds - show retention, repeat orders, or sticky subscriptions. Investors don’t need addiction, but they do need evidence your business stands on its own: solid margins, steady growth and progress you can prove.

B) Raise at the right moment: Klarna didn’t raise $4.2B in one go. They layered it, tying each new round to a clear phase: bigger purchases, then fashion, then everyday spending. That discipline is what kept valuations high. You can use the same approach: raise smaller rounds at real inflection points - revenue doubling, a product milestone, entry into a new market. Go too early, and you give away too much. Go too late, and you’re stuck with higher interest or worse terms. Time it right, and you hold onto more equity while still moving forward.

C) Protect control with structure: Too many business owners hand over half their company in round one and regret it. Smaller, well-timed raises are cleaner. Blending debt with equity can be cleaner still. Debt isn’t reckless if it’s structured properly; it often leaves you with more control and less dilution, while still giving you the runway you need.

The “effortless” raises you see on LinkedIn aren’t effortless. Klarna’s certainly weren’t. They were staged: right timing, right story, right structure. Anyone can raise once. The real test is raising again without pawning off your cap table.

That’s why knowing the different types of business funding - and when to use each one - matters more than ever.

I’m going to get a bit philosophical here. Stick with me for a minute, I promise I won’t go into full TED-talk mode.

I’ve noticed (mainly after chasing too many of my own dopamine hits): happiness isn’t really about what’s happening around you. Land the deal, lose the deal, get the LinkedIn likes, get ignored completely - the buzz wears off either way. Then you’re left with whatever baseline you’ve built for yourself.

Contentment’s trickier. You can’t buy it, finance it or split it into four neat payments. It’s inconveniently DIY. Which is why most of us (me included) would rather blame the job, the market or the inbox than admit it’s on us.

But if Klarna taught me anything, it’s this: chasing dopamine is easy. Building contentment? That’s the harder, less glamorous work - and you don’t get to outsource it.

For the speed-readers like me who want it spoon-fed:

Print this out, stick it above your desk - and remember: NEVER KLARNA THE BURRITO.

Klarna proves investors don’t always care about falling valuations, losses or even ethics. What hooks them are behaviours that look permanent.

If you want that same pulling power - minus the cultural controversy - sharpen your capital story. That’s the kind of work I do at FundOnion - I can help sharpen the structure and story of your raise so it lands.

My inbox is always open…

Till next time,

James