Financial Software - Monday, June 8, 2009
UK's Wonga Raises $22.5M For Short Term Loans
London-based Wonga has raised $22.25M led by Accel Partners and Greylock Partners, with existing investor, Balderton Capital. Wonga offers small, short-term cash advances to UK consumers. They plan to use the money to expand beyond the UK.
They boast "our automated, real-time processing systems leaves traditional lenders eating dust." Wonga says it has done 100K cash advances of up to 30 days since it launched 11 months ago.
Wonga says traditional sources of short term loans are rigid, slow and non-transparent. Wonga appears to be faster, however, they charge the same harsh rates as traditional providers - roughly one percent per day.
Prior to creating Wonga, the startup's founder and CEO Errol Damelin was CEO of hosted supply chain firm Connect Ltd.
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This has been big news recently. That's a lot of wonga!
Posted by: James at June 22, 2009 9:27 AM
The Wonga APR is high/harsh, but I can see the cost being manageable for a 5 or 7 day loan. That's when it is used for a real immediate cash shortage. 30 days loans come with a lot of interest and that's where the struggle to pay back begins. Use Wonga wisely and it's a useful resource. use it unwisely, and you could find yourself in hot water.
Posted by: SJ at June 23, 2009 6:34 AM
Wow. Interesting investment.. Wonga is definitely not another "cool feature" start up.. is VC's would invest in more real world companies like this the industry would look MUCH better.
Posted by: Jake at June 23, 2009 6:36 AM
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