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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.

  1. 2006

    Founding and Automated Lending Model

    Founding / launch

  2. 2009

    Venture Funding Rounds

    Funding round

  3. 2010

    Mass Market Brand and Sponsorship

    Launch / marketing (brand building)

  4. 2012

    International Expansion and BillPay

    Expansion / acquisition (later divestiture)

  5. 2014

    Affordability Write Off

    Regulatory settlement / restructuring

  6. 2014

    Fake Lawyer Letters and FCA Redress

    Regulatory settlement (redress)

  7. 2015

    FCA Price Cap on High Cost Short Term Credit

    Pricing change (imposed by regulator)

  8. 2018

    Administration and Compensation Claims

    Failure / bankruptcy (administration)