Wonga back­ers take stake in wage draw­down start-up

The Daily Telegraph - Business - - Technology Intelligen­ce - By Matthew Field

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

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