Wonga backers take stake in wage drawdown start-up
A LONDON start-up that lets employees draw down their wages early without having to resort to risky payday loans has secured £20m from investors, including the backers of collapsed payday lender Wonga.
Wagestream enables companies to pay their employees their wages as they earn them, rather than in an endof-month pay packet. Billed as a workplace benefit, staff can pay a flat fee of £1.75 to secure an early payment of a percentage of their salary.
Employers including five NHS trusts, Bupa, Brewdog and Zizzi have signed up to Wagestream for their staff.
The company calls its technology “workplace banking”, with other products to encourage saving.
Wagestream claims this can stop staff from having to turn to more risky debt in the event of an emergency. The company has now raised £65m in total from investors. The new £20m, raised by Peter Briffett, the chief executive, while locked down and working from his garden shed, was led by the fund Northzone with QED Investors, Balderton Capital and Latitude Ventures. Latitude is run by Robin Klein and son Saul, the co-founder of LoveFilm.
Balderton was also one of the biggest backers of Wonga, a payday loan company that collapsed in 2018 after it was flooded by compensation claims for loans made before 2014.
Robin Klein was the former chairman of Wonga, stepping down from its board in 2015.
Earlier this year, administrators for Wonga began informing up to 400,000 people they may have a claim for compensation for mis-sold loans, although most are receiving a fraction of what they had claimed. Wonga’s loans could see interest rates soaring to 5,000pc.
While Wonga offered high-interest loans to get people to payday, Wagestream acts like an employee benefit.
The company does not charge interest on its products and instead makes money through its flat fees. Companies are able to draw wages for staff early via Wagestream’s credit facilities. The start-up said it had seen a boost in signups during the pandemic as companies looked for ways to provide staff with more financial flexibility.
Peter Briffett, the chief executive of Wagestream, raised £20m while working from his shed