Wonga secures $22 million funding round

Wonga, the web 2.0 startup that offers short term cash loans, has today confirmed a new $22.25 million funding round supported by existing investors Balderton Capital as well as new backers Accel Partners and Greylock Partners.

This is a great example of a cash generative, profitable web business attracting significant funding at a time when many see VC funding in the web space drying up.

Ultimately though, as co-founder Errol Damelin set out in an interview about Wonga with SmallBizPod earlier this year, it’s the startup’s automated financial risk assessment back end that must be proving equally attractive as positive cash flow to investors.

The business has already provided cash advances to over 100,000 people with apparently very low default rates.

Errol Damelin said today:

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.

Being an innovative company in the financial services space was always going to be either impossibly difficult, or just what the industry needed after the great credit crunch calamities at the end of 2008.

It’s good to see Damelin and his team at Wonga have clearly impressed VCs and demonstrated that where there’s focus on a real business model and innovation, there’s still funding to be found.