Wonga job cuts: The evolution of the UK’s top payday lender
Damelin establishes Wonga
Wonga was founded by current chief executive Errol Damelin in October 2006. With the help of software engineer Jonty Hurwitz and venture secured from Balderton Capital, Damelin launched wonga.com in 2007. By June 2009, the company had reached 100,000 loans. The firm launched its iPhone app in December 2009, after raising £13.9m in a second round of funding. In 2011, Wonga raised £73m in a third funding round and the following year saw the company open a business in South Africa offering consumer loans.
Wonga begins ad campaigns
Wonga started advertising its services in 2010, when the firm sponsored free travel on the London Underground on New Year’s Eve, and posters were put up promoting its website brandishing the slogan: “Sometimes you need some extra cash”. The advert received widespread condemnation and Transport for London later banned payday loan firms sponsoring their services.
Company mulls £1.46bn US float
In June 2012, it was reported that Wonga was considering a stock market flotation in the US in the following year that could have valued the company at up to £1.46bn. The company discussed with investment banks Barclays Capital, Goldman Sachs and JP Morgan Cazenove the prospect of listing on Nasdaq or the New York Stock Exchange. In the end, Wonga decided against floating despite receiving considerable interest from private equity firms.
Firm comes under sustained pressure
Wonga came under pressure for its advertising techniques and high interest rates after protests against the firm in 2012. In January, the firm endured the wrath of the student unions after allegedly targeting students for loans. Later in the year, Wonga received further criticism after Newcastle United supporters and MPs protested after the payday lender became the football club’s official shirt sponsor in an £8m deal. In July 2013, Newcastle United striker Papiss Cisse refused to wear the kit, citing religious reasons as a practising Muslim. Then in July 201 3, the payday lender was singled out for criticism by Archbishop of Canterbury Justin Welby, who pledged to the put the firm out of business by helping credit unions to compete with it.
Puppets go as firm reforms
In July last year, Wonga announced it would stop using puppets in its TV adverts and marketing after it was criticised for targeting the young. The firm said the puppets would go as part of a plan to “re-present Wonga to the public”. Chairman Andy Haste also promised to review its products and the profile of its customers to makes sure that the company was lending only to those who were able to afford repayments.