Evaluating only Iwoca’s profile at its peak — without knowing the outcome — the model ranked Unit economics as the #1 likely cause. That’s exactly how it died.
Key Events Timeline
FOUNDING
Founded in London; fast credit for small businesses
PRODUCT LAUNCH
COVID: major growth via UK government CBILS lending scheme
FUNDING
Raised £150M; expanded to Germany and Poland
PRODUCT LAUNCH
Post-COVID SME insolvencies rise; bad debt provisions spike
Iwoca was a UK-based SME lending platform founded in 2011, providing fast credit to small businesses underserved by traditional banks. It raised over £200 million and grew significantly during COVID through government-backed loan schemes (CBILS). Post-COVID, the picture reversed: many SME borrowers who had taken COVID emergency loans faced genuine insolvency, driving up Iwoca's bad debt provisions substantially. Rising interest rates made the cost of capital expensive while simultaneously pushing struggling SMEs over the edge. In 2023-2024, Iwoca disclosed significant impairments and losses, prompting restructuring that included workforce reductions.
Lesson
“Government-backed lending programs distort credit quality signals. Iwoca's COVID loan growth was real but the credit quality was government-guaranteed — when that guarantee ended, the underlying SME lending risk was far higher than the book suggested.”