From CNBC: 2024-10-03 06:00:01

Sebastian Siemiatkowski, CEO of Klarna, warns of a brain drain in European tech talent as the payments company approaches its IPO. Siemiatkowski highlights concerns about unfavorable rules on employee stock options that could lead to losing talent to U.S. tech giants like Google, Apple, and Meta.

Despite its popularity for buy now, pay later plans, Klarna faces issues offering competitive equity compensation compared to its publicly-listed peers. Siemiatkowski points to hurdles like high social security payments that erode the value of stock rewards and lack of predictability in planning expenses effectively.

Klarna’s CEO signals ambitions for an IPO, possibly in 2024, with Goldman Sachs as its lead underwriter in 2025. Siemiatkowski emphasizes the importance of going public soon, positioning Klarna as a major fintech player after Affirm and Afterpay made successful IPO debuts.

A study by Index Ventures last year found disparities in employee ownership between late-stage European startups and U.S. counterparts, raising concerns about Klarna’s ability to retain talent. Siemiatkowski acknowledges the risks of losing employees to American tech firms as Klarna expands in the U.S., highlighting Europe’s reluctance to offer competitive compensation.

Read more: European tech brain drain ‘number one risk’ ahead of IPO