Evaluating only Iwoca (growth stall)’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.
Iwoca had built a respected SME lending platform in the UK and Europe, processing billions in loans. Unlike some competitors, it had prudent underwriting and had survived COVID via the UK government's CBILS scheme. But the 2022–23 interest rate cycle dramatically increased its funding costs and compressed net interest margins. SMB default rates rose under inflation stress. Iwoca cut staff significantly in 2023, effectively ending its growth phase and entering a period of managed contraction.
Lesson
“Even conservative SMB lenders need rate-shock stress tests embedded in their capital planning. Profitability at 4% rates doesn't guarantee profitability at 11%.”