…By Henry George for TDPel Media.
Cervest, a renowned London-based “climate intelligence” company and one of the UK’s top AI firms, has recently gone bankrupt, causing significant financial distress for its more than 100 employees.
The collapse of Cervest deals a blow to London’s tech sector, which has already been grappling with layoffs, decreasing valuations, and a decline in investment.
This setback undermines the vision of Rishi Sunak, the UK Chancellor of the Exchequer, who aimed to establish London as a global leader in artificial intelligence.
Loss of AI Champion Shakes UK Tech Sector:
Cervest’s downfall marks a major setback for the AI sector in the UK, which had been seemingly impervious to the funding slowdown experienced by other tech areas.
Investors had been actively supporting AI firms following the rise in popularity of ChatGPT.
However, Cervest’s bankruptcy indicates that the AI sector is not immune to financial challenges.
In contrast, London received positive news recently as OpenAI, the company behind ChatGPT, announced its plans to establish its first international office in the city.
Recognition and Unpaid Staff:
Just three months ago, Cervest received recognition from the Department for Science, Innovation, and Technology (DSIT) as one of the ten leading AI companies in the UK.
The DSIT listed Cervest as a firm at the forefront of AI, capable of transforming daily lives through its AI-powered modeling of businesses’ climate risks.
However, internal messages suggest that Cervest had been struggling to pay its staff, with salary delays dating back several months.
By April, employees had not received their pay, and May’s wages were never received.
The Fall of a Once-Promising Company:
Cervest’s insolvency came as a surprise, considering its positive media coverage and ongoing hiring efforts throughout 2023.
In May, the company even announced a partnership with Accenture, participating in an accelerator program led by the renowned consulting and IT giant.
Days later, Cervest celebrated its work for Wickes, a prominent DIY retailer.
The company’s website and social media platforms advertised a webinar that was scheduled but did not take place.
Founder and former CEO Iggy Bassi claimed that insolvency was not expected.
Failed Funding and Concerns for the Future:
Cervest had secured the first phase of a two-phase funding deal, involving investors such as former T-Mobile boss John Legere, former Microsoft executive Mike Slade, and tech investor Zen Matoshi.
However, it seems that additional funding from Legere’s group fell through, leading to the company’s inability to pay its employees in May.
Former employees express concerns that Bassi may start another firm with similar issues.
Filings indicate that Bassi recently became a director of Earthena.ai, a newly founded company, alongside Cervest’s general counsel Raj Mahapatra.
Cervest Enters Administration:
The collapse of Cervest resulted in its declaration of insolvency, with administrators from Interpath appointed to handle the aftermath.
Despite raising over $40 million in funding for its EarthScan platform, the company faced significant challenges during its latest funding round.
The directors explored various options, including seeking alternative investment and a potential sale of the business.
Unfortunately, a solvent solution could not be found, leading to the appointment of administrators.
Sale of Intellectual Property and Debt Settlement:
Following the administration, Cervest’s intellectual property rights were sold to rival company Mitiga.
The business associated with John Legere held a fixed charge on these assets as a secured creditor.
The sale of intellectual property helped to alleviate debts related to its connections with Cervest.
Conclusion:
Cervest’s collapse has left a trail of unpaid employees and dealt a blow to London’s aspirations of becoming a leading hub for artificial intelligence.
Despite receiving recognition as a prominent AI company, Cervest struggled to meet its financial obligations, leading to its insolvency.
The administrators have managed to sell its intellectual property rights, providing some resolution to outstanding debts.
However, the incident serves as a reminder of the challenges faced by AI firms in securing funding and maintaining financial stability.