Wonga
Payday lending at 5,853% APR attracts massive regulatory backlash.
Wonga was a Fintech/Lending startup founded in 2006 in UK. It raised $147M before collapsing in 2018 — 12 years of runway burned. IdeaProof's AI Failure Score: 62/100, driven by regulatory crackdown & predatory lending. The shutdown affected employees, investors, and the broader Fintech/Lending ecosystem. This case study breaks down the timeline, root causes, competitors that won, and replicable lessons for founders validating similar ideas today.
Why did Wonga fail?
Wonga failed in 2018 after 12 years of operation, losing $147M in raised capital. The root cause was regulatory crackdown & predatory lending. Key lesson: Payday lending at 5,853% APR attracts massive regulatory backlash.
2006 → 2018
$147M
Fintech/Lending
UK
IdeaProof AI Failure Score
What Happened: The Timeline
2006
Wonga founded in London
2012
Peak: £1.2B in loans issued, massive TV advertising
2014
FCA caps interest rates, tightens regulation
2018
Collapse into administration from compensation claims
Root Causes
Wonga offered short-term loans at annualized rates exceeding 5,000% APR. The UK-based company grew rapidly with aggressive advertising but attracted regulatory scrutiny. The FCA capped interest rates, required affordability checks, and forced Wonga to write off £220M in loans issued to customers who couldn't afford them. A flood of compensation claims pushed Wonga into administration in 2018.
Sources & References
Could This Failure Have Been Prevented?
IdeaProof's AI validates market demand, competitive positioning, and business model viability in minutes — catching the exact issues that sank Wonga.