Wonga investors inject £10M so cash-strapped payday lender can fund claims

If you were at Disrupt London four years ago you may remember more than a little awkwardness during an investor panel when two VCs that had invested in European payday loans firm Wonga declined to comment on what had gone wrong at their portfolio company in the wake of a £220M write down.

Yesterday Sky News reported that those same two, Accel Partners and Balderton Capital, are among a group of Wonga investors that have agreed to inject a further £10M (~$13M) into the business to help fund compensation claims related to its past censured practices.

We’ve reached out to Accel and Balderton for comment.

Prior to the latest emergency funding, Wonga had raised a total of around £145.5M, according to Crunchbase. Its 2011 Series C round was backed by investors including Accel, Oak Investment, Meritech Capital, 83North; while a 2009 Series B included Accel, Balderton, Dawn Capital, HV Holtzbrinck Ventures and 83North. It was founded in the UK in 2006.

By 2014 rising concern about the rates of interest being charged to vulnerable customers on short term loan products led to a regulatory intervention to clean up the sector, and Wonga agreed to write off the loans of 330,000 customers.

It also agreed to waive the interest and fees for a further 45,000 after admitting its automated checks had failed to adequately assess affordability. The algorithmic technology it had touted as its core IP had been lending money to people who did not have the income to pay it back.

The company was also censured by the Financial Conduct Authority (FCA) for sending fake lawyers’ letters to customers in arrears — and had to pay out a further £2.6M in compensation for that.

Four years later Wonga is still paying the bill for its past conduct — in the form of increasing numbers of individual compensation claims.

In a statement issued to Sky News, a Wonga Group spokesman said there has been a “marked increase” in compensation claims for legacy loans driven by claims management companies.

“Wonga continues to make progress against the transformation plan set out for the business. In recent months, however, the short-term credit industry has seen a marked increase in claims related to legacy loans, driven principally by claims management company activity,” the spokesman said.

“In line with this changing market environment, Wonga has seen a significant increase in claims related to loans taken out before the current management team joined the business in 2014. As a result, the team has raised £10M of new capital from existing shareholders, who remain fully supportive of management’s plans for the business.‎”

According to Sky News, Wonga was on the brink of insolvency when its investors agreed to inject more capital into the business, with CEO Tara Kneafsey‎ warning its institutional shareholders in late May the company risked becoming insolvent without a capital injection.

Following the shredding of its original business model — with the FCA’s cap of 0.8 per cent per day for all high-cost short-term credit loans applying from January 2015 — Wonga has been loss making for the past several years, reporting a £65M loss for 2016 and just over £80M for 2015.

And Sky reports that its latest emergency fundraising took place at valuation of just $30M (£23M) for the business.

This represents a swingeing haircut for a company that, in 2012, had believed it was on a three-year growth path to a £15BN valuation, i.e. off the back of short term loan products that charged annual interests rates as high as 5,853% that were sold to hundreds of thousands of people who couldn’t afford to pay them back.

Wonga’s website now lists as “representative” an APR of 1,460% in an online FAQ — and further claims: “We’ve introduced lots of changes at Wonga to make sure we offer better, fairer loans to customers. We take a responsible approach and lend only to those we believe can reasonably afford to repay.”

As part of this process of ‘transformation’ — i.e. from algorithmic loan sharking to regulatory compliant short term lending — one recent focus for Wonga’s executive team to try to drum up ethical business has been on offering more flexible loan products.

Sky says Wonga’s board has previously expressed confidence it can build a sustainable business, and notes the company had been targeting a return to profitability last year but has yet to report its results for 2017.

According to its sources, Wonga’s cashflow situation has become so tight its board is evaluating the sale of some of its assets in addition to raising more debt.

Already last year wonga sold off its German payments business, BillPay, to Klarna — raising around £60M.

The Accel team is coming to Disrupt Berlin

Every time Accel invests in a startup, it’s an instant positive sign in the startup community. The venture capital firm has a rich history with decades of investments in successful startups. That’s why we’re excited to have four partners at Accel on stage at Disrupt Berlin.

Philippe Botteri, Sonali De Rycker, Luciana Lixandru and Harry Nelis will all relocate their partner meeting to our stage.

Accel is a different VC firm for many reasons. First, while the firm started in Silicon Valley, the team bet early on the European startup scene, back in 2001. With an office in London, the team keeps an eye on the entire continent for investment opportunities.

The firm has invested in Deliveroo, BlaBlaCar, Supercell, Spotify and so many others. With such a good track record, it’s clear that some recent investments are also going to become massive companies — nobody has realized it just yet.

In November, we will have four Accel partners on stage to discuss the firm’s investment thesis, each partner’s current obsessions and their collective thoughts on the startup scene in Europe.

It’s going to be a great way to hear the granularity of a team with strong beliefs. I’m sure they don’t always agree on everything, but somehow they manage to invest together as a firm.

TechCrunch is coming back to Berlin to talk with the best and brightest people in tech from Europe and the rest of the world. In addition to fireside chats and panels, new startups will participate in the Startup Battlefield Europe to win the coveted cup.

Grab your ticket to Disrupt Berlin before August 1st as prices will increase after that. The conference will take place on November 29-30.


Philippe Botteri, Partner, Accel

Philippe Botteri focuses on SaaS, enterprise and marketplace businesses.

Philippe led Accel’s investments in DocuSign (IPO), PeopleDoc, Qubit, Algolia, BlaBlaCar, Doctolib and Zenaton. He also works closely with the team at Fiverr and CrowdStrike. Prior to joining Accel, Philippe was with Bessemer, where he worked with the firm’s SaaS and Ad Tech investments including Cornerstone OnDemand (public), Eloqua (public) and Criteo (public).

Philippe is from Paris and graduated from Ecole Polytechnique, where he is a member of the Entrepreneurship Advisory Board, and Ecole des Mines.

Sonali De Rycker, Partner, Accel

Sonali De Rycker focuses on consumer, software and financial services businesses.

She led Accel’s investments in Avito (acquired by Naspers), Lyst, Spotify, Wallapop, KupiVIP, Calastone, Catawiki, JobToday, Wonga, Shift Technology and SilverRail. She is also an independent director of Match Group (public). Prior to Accel, Sonali was with Atlas Ventures.

Sonali grew up in Mumbai and graduated from Bryn Mawr College and Harvard Business School.

Luciana Lixandru, Partner, Accel

Luciana Lixandru focuses on consumer internet, software and marketplace businesses.

She helped lead Accel’s investments and ongoing work in UiPath, Deliveroo, Framer, Avito, Catawiki, Vinted and others. She is also an independent director of Showroomprive (public). Prior to Accel, Luciana was with Summit Partners.

Luciana is from Romania and graduated from Georgetown University.

Harry Nelis, Partner, Accel

Harry Nelis focuses on consumer internet, financial services and software companies.

He led Accel’s investments in CHECK24, Funding Circle, KAYAK (IPO; acquired by Priceline), Showroomprive (IPO), WorldRemit, Celonis, Callsign, Instana and others.

Harry started his career as an engineer at Hewlett-Packard before founding the venture-backed software company E-motion.

Harry is from the Netherlands and graduated from Delft University of Technology and Harvard Business School.

Fever gets $20M to delight more hipsters with A/B tested Madhatter’s G&T parties

London-based Fever, an urban events discovery app-cum-entertainment events business with an online media arm that it uses as marketing megaphone and data-gathering lens on its community of users, has closed a $20 million Series C investment to expand into new markets across Europe and North America — and win more hipsters over to its own brand “immersive themed experiences”.

The round was co-led by European media group Atresmedia and real estate company Labtech — because of course parties need venues — and with participation from existing investors Accel Partners and 14W Ventures.

The 2014-founded startup had raised $19.3M prior this round, according to Crunchbase, including a $3M seed for its original Fever event discovery app back in 2014.

Fever’s urban events discovery app uses a recommendation algorithm to offer personalized listings coverings activity such as music festivals, theatre, fashion, restaurants and pop-ups. But it also feeds and supplements that business via an online media network, called Secret Media Network, plus a series of branded social media channels (Secret London, Secret NYC etc) — using this cross-platform media operation to gather intel on what its community of urban users would like to do next for paid hipster fun.

In its main markets (London, New York, Paris, Madrid) it says the reach of this network is more than 12M unique users per week — allowing it to market upcoming events to millions of engaged eyeballs as well as power its own-brand ‘Fever Originals’ events, based off of the insights it’s mining from its community.

Specifically it says it’s using anonymised behavioral data-mining to algorithmically predict untapped demand for events that don’t yet exist — and then serving them up as an own brand event.

This community data driven events programming extends to testing the intent users have for different themed “immersive experiences” in different settings and scenarios — a process it likens to Netflix’s approach of using analytics to understand audiences to develop and market new content.

So what kind of events has this A/B testing-esque programming process resulted in?

Fever gives an example of an Alice in Wonderland themed experience it ran in a double decker bus in Brooklyn — saying this was a “clear winner” during its user analysis, when it tried out alternative theme options (such as Aladdin and the Lion King), as well as alternative city locations (in other parts of New York), and venues (rooftop, double decker bus, indoors). But its NYC community clearly wanted Alice in a bus in Brooklyn.

The resulting Madhatter themed G&T immersive experience amassed more than 12,000 people on the waitlist before the event went live. “At $60 per person, it sold out for the month of June in just a couple of days since it was released in early May, with only a sketch of what the venue would look like, and a brief story describing the experience,” Fever tells TechCrunch.

Another forthcoming own-brand event — to be announced later this month — is billed as the biggest escape room in Europe. TechCrunch’s Roman Dillet is bound to be interested in that — or at least if the event is bound for Paris.

Fever says it will also put on a music and art festival in Madrid in September which it’s called “Jardin de las Delicias” which it says is inspired by Bosch’s Garden of Earthly Delights — a late 15th or early 16th century painting that hangs in Madrid’s Museo de Prado.

When open, the triptych masterpiece in oils depicts a heaven to hell progression starting with Adam and Eve in the garden of Eden, and ending in a highly detailed and nightmarish illustration of hell involving animals torturing and feasting on human flesh.

The large central panel illustrates a vision of life between those two moral bookends: Teeming with nude male and female flesh, animals, plants and some fantastical creatures. Presumably that’s where Fever’s themed event intends to focus. At least, we hope so…

El jardín de las Delicias, de El Bosco.jpg
By Galería online, Museo del Prado., Public Domain, Link

Fever says its data-driven, wait-list model allows it to mitigate financial risk for the events it programs and the partners it works with (such as drinks brands).

It does not use a booking fee model for Fever Originals — its platform is free for users, with no additional fees when they buy a ticket — rather it’s operating what it calls a “marketing fee monetization strategy”, which is describes as significantly more lucrative than a traditional booking fee.

“The organisers pay a commission fee based upon Fever’s ability to drive additional ticket sales and attendance to their event or experience,” it explains. “Fever is using its prescription power to get its users excited about experiences they were not originally considering, and as a result is offering a powerful marketing tool for organisers, in comparison with other traditional tools (billboards, TV ads, etc.).

“This is in contrast to a ‘ticketing fee’, which refers solely to a fee charged for the processing of a ticket sale transaction. Given that Fever/Secret Media creates significant financial and advertorial value for event organisers, the ‘marketing fee’ is around 3-5 times that of a ‘ticketing fee’.”

It adds that its current cities have been growing self-sufficiently over the last 12 months, at a rate of 100% year on year, since reaching break-even — which also happened a year ago.

At the same time, it continues to offer third party events discovery within its apps, saying the business model it started with hasn’t changed but that its growing audience (and the data it’s able to extract from them) has allowed it to supplement that by programming its own events.

With A/B-tested events like these, the world’s hipsters have probably never had it so good.

Commenting on the Series C in a statement, Javier Nuche, MD of diversification at Atresmedia, said: With this investment we are consolidating our presence in the fast-growing experience economy and digital marketing space. Fever’s ability to mobilize a digital audience together with its optimization technology has proven extremely valuable for advertisers and will create very significant commercial synergies with Atresmedia, in our goal to offer the best communication solutions to our clients.”

With at least $1.3 billion invested globally in 2018, VC funding for blockchain blows past 2017 totals

Although bitcoin and blockchain technology may not take up quite as much mental bandwidth for the general public as it did just a few months ago, companies in the space continue to rake in capital from investors.

One of the latest to do so is Circle, which recently announced a $110 million Series E round led by bitcoin mining hardware manufacturer Bitmain. Other participating investors include Tusk VenturesPantera CapitalIDG Capital PartnersGeneral CatalystAccel PartnersDigital Currency GroupBlockchain Capital and Breyer Capital.

This round vaults Circle into an exclusive club of crypto companies that are valued, in U.S. dollars, at $1 billion or more in their most recent venture capital round. According to Crunchbase data, Circle was valued at $2.9 billion pre-money, up from a $420 million pre-money valuation in its Series D round, which closed in May 2016. According to Crunchbase data, only Coinbase and Robinhood — a mobile-first stock-trading platform which recently made a big push into cryptocurrency trading — were in the crypto-unicorn club, which Circle has now joined.

But that’s not the only milestone for the world of venture-backed cryptocurrency and blockchain startups.

Back in February, Crunchbase News predicted that the amount of money raised in old-school venture capital rounds by blockchain and blockchain-adjacent startups in 2018 would surpass the amount raised in 2017. Well, it’s only May, and it looks like the prediction panned out.

In the chart below, you’ll find worldwide venture deal and dollar volume for blockchain and blockchain-adjacent companies. We purposely excluded ICOs, including those that had traditional VCs participate, and instead focused on venture deals: angel, seed, convertible notes, Series A, Series B and so on. The data displayed below is based on reported data in Crunchbase, which may be subject to reporting delays, and is, in some cases, incomplete.

A little more than five months into 2018, reported dollar volume invested in VC rounds raised by blockchain companies surpassed 2017’s totals. Not just that, the nearly $1.3 billion in global dollar volume is greater than the reported funding totals for the 18 months between July 1, 2016 and New Year’s Eve in 2017.

And although Circle’s Series E round certainly helped to bump up funding totals year-to-date, there were many other large funding rounds throughout 2018:

There were, of course, many other large rounds over the past five months. After all, we had to get to $1.3 billion somehow.

All of this is to say that investor interest in the blockchain space shows no immediate signs of slowing down, even as the price of bitcoin, ethereum and other cryptocurrencies hover at less than half of their all-time highs. Considering that regulators are still figuring out how to treat most crypto assets, massive price volatility and dubious real-world utility of the technology, it may surprise some that investors at the riskiest end of the risk capital pool invest as much as they do in blockchain.

Notes on methodology

Like in our February analysis, we first created a list of companies in Crunchbase’s bitcoin, ethereum, blockchaincryptocurrency and virtual currency categories. We added to this list any companies that use those keywords, as well as “digital currency,” “utility token” and “security token” that weren’t previously included in the above categories. After de-duplicating this list, we merged this set of companies with funding rounds data in Crunchbase.

Please note that for some entries in Crunchbase’s round data, the amount of capital raised isn’t known. And, as previously noted, Crunchbase’s data is subject to reporting delays, especially for seed-stage companies. Accordingly, actual funding totals are likely higher than reported here.