Wonga.com, an online provider of short-term cash advances launched last year, has completed a new round of funding led by Accel Partners and Greylock Partners. The $22.25m round was also supported by existing investor Balderton Capital.
Wonga.com helps UK consumers solve occasional cash flow problems with short-term, high-interest loans. Its main differentiator from other short-term loan businesses is that it offers an instant online decision on applications 24 hours a day, and delivers cash into UK bank accounts within one hour.
The company says it is extremely selective on who it lends to, and only approves around one in 10 applicants. It claims its sophisticated risk and decision technology taps into a wide range of data sources, including credit reference agencies and other public data sources, but also uses its own behavioural learning algorithm to profile customers.
It has already provided nearly 100,000 flexible cash advances of up to 30 days. Applicants select exactly how much cash they need, up to £750. They can then determine their own price by then selecting how many days they want the money for.
Errol Damelin, co-founder and chief executive officer of Wonga, said: "Our ground-breaking technical innovation and focus on amazing our customers with high levels of service has enabled us to become profitable in a very short a space of time. Yet we are also building a sustainable business based on making highly selective and responsible lending decisions.
"We've built to scale and there is now huge scope for expansion and delivering even more value for our customers. Balderton Capital has backed us from concept and our two new investors show how game-changing the Wonga proposition is.
"Accel Partners is a global investor that has backed some of the fastest growth companies of the last two decades, such as Facebook. Greylock Partners is a thought leader and a long-term investor and they've made a significant statement by making a commitment to Wonga. Backing from three such prominent firms underscores our ability to challenge a major market in a very meaningful way."
Laurel Bowden, partner at Greylock, commented: "In this market, there are some excellent opportunities to build innovative financial services businesses. Wonga's management team has developed a very innovative and real-time credit offering, solving relatively small immediate cash needs, and the business has shown impressive traction in the market. This is a key deal for Greylock in Europe and we are pleased to have an opportunity to help Wonga expand both locally and globally."
Sonali De Rycker, partner at Accel, said: "Wonga's ability to offer credit in real-time while keeping a tight control on customer experience and defaults is truly disruptive. The team has done a phenomenal job growing the company rapidly over a short period of time. We believe the company has the potential to become a category leader in the consumer finance marketplace."