Finance · Profile from Finance Research Companion
Wonga Group (Wonga.com)
A London online lender founded in 2006 by two South African entrepreneurs, Errol Damelin and Jonty Hurwitz, that used automated, data-driven underwriting and a slider on a web page to make short-term loans of a few hundred pounds in minutes, grew in five years into Britain's best-known payday lender and a celebrated venture-backed "fintech" before the word was common, and then became the symbol of predatory high-cost credit. Fake debt-collection letters (2008–10, exposed in 2014), a forced write-off of ~£220m of loans to ~330,000 customers (2014), and the Financial Conduct Authority's January 2015 cap of 0.8% a day on the cost of short-term credit broke its economics. A wave of compensation claims for unaffordable lending pushed it into administration on 30 August 2018. Claimants eventually received 4.3p in the pound. For a US reader Wonga is the cleanest natural experiment in what happens to an online payday lender when a national regulator imposes a hard price cap and an affordability standard: the outcome US payday lenders fought the CFPB's 2017 rule and state 36% caps to avoid.
At a glance
- Founded
- October 2006, London, by Errol Damelin and Jonty Hurwitz; first loans 2007; full launch July 2008
- Founders
- Errol Damelin (CEO 2006–November 2013), a South African-born serial entrepreneur; Jonty Hurwitz, South African-born engineer and later a sculptor
- Headquarters
- London (Camden), with operations in South Africa, Poland, Spain, Canada (to 2016) and, through BillPay, Germany and neighbouring markets (2013–17)
- Ownership / structure
- Private; Wonga Group Ltd. Venture investors held ~77% of shares (reported), including Balderton Capital, Accel, Greylock, Dawn Capital, Oak Investment Partners, Meritech and the Wellcome Trust
- Leadership
- Errol Damelin (CEO to 2013); Niall Wass (CEO November 2013–May 2014); Tim Weller (interim, 2014); Andy Haste (chairman from 2014, reported); Tara Kneafsey (UK managing director and later group CEO from November 2014, reported)
- Segment and clients
- Non-bank consumer lender: short-term ("payday") loans of up to ~£1,000 for up to ~30 days, later short instalment loans; small-business loans (Everline); point-of-sale payments (BillPay). Customers: UK adults with temporary cash shortfalls, many with weak credit
- Scale at peak
- ~£309m revenue and ~£62.5m pre-tax profit in 2012 (reported, verify); ~1m UK customers and several million loans a year (reported, verify)
- Profit
- Profit £12.4m (2010), £45.8m (2011), ~£62.5m (2012, verify), £39.7m (2013); losses of ~£38m (2014), ~£80m (2015) and ~£66.5m (2016) (reported)
- Failure
- Shareholders injected £10m on 4 August 2018; Grant Thornton appointed administrator 30 August 2018; ~£535.6m of agreed claims received a single 4.3p dividend (~£23.1m) in early 2020; company dissolved December 2020 (reported)
- Signature moves (incl. failures)
- Founding and the automated lending model (2006–08); venture funding (2009–11); mass-market brand and sponsorship (2010–14); international expansion and BillPay (2012–13); fake lawyer letters and FCA redress (2014); affordability write-off (2014); FCA price cap (2015); administration and compensation claims (2018–20)
8 strategic moves analysed
Each one gets a full strategy file in the companion: context, the decision, the financing, what happened, and the lesson.
2006
Founding and Automated Lending Model
Founding / launch
2009
Venture Funding Rounds
Funding round
2010
Mass Market Brand and Sponsorship
Launch / marketing (brand building)
2012
International Expansion and BillPay
Expansion / acquisition (later divestiture)
2014
Affordability Write Off
Regulatory settlement / restructuring
2014
Fake Lawyer Letters and FCA Redress
Regulatory settlement (redress)
2015
FCA Price Cap on High Cost Short Term Credit
Pricing change (imposed by regulator)
2018
Administration and Compensation Claims
Failure / bankruptcy (administration)