Cervest, a London ‘climate intelligence’ firm hailed by the Government as one of the UK’s 10 most “exciting” AI firms just three months ago has gone bust with staff left unpaid, the Standard can reveal.
All of Cervest’s more than 100 staff have lost their jobs. Its 71 UK employees haven’t been paid since April.
The collapse of a supposed AI champion is the latest dent in a London tech sector struggling with layoffs, falling valuations and dwindling investment. In particular, it’s a blow to Rishi Sunak’s vision of making London a world-leading artificial intelligence hub, laid out at London Tech Week just days before Cervest entered administration.
It is maybe the biggest downfall so far in the UK AI sector, which had appeared to be the one area of tech in the country that was immune to the slowdown in funding as investors threw money behind artificial intelligence firms in the wake of ChatGPT’s popularity. Yesterday, the capital received good news as the company behind ChatGPT, OpenAI, announced that London would be the home to its first international office.
On 29 March, the seven-week-old Department for Science, Innovation and Technology (DSIT) listed Cervest among “10 UK companies at the forefront of” AI in a social media post. The ten companies on the list, it said, were “making exciting new discoveries that could transform our daily lives”.
It said Kensal Town-headquarted Cervest, which used AI to model businesses’ climate risks, would “help align investment decisions with climate predictions for a more sustainable and resilient future”.
But at the time, Cervest was behind on fully paying staff, after delays in previous months, messages seen by the Standard appear to show.
April pay was late too. Wages for May never arrived at all.
Cervest was declared insolvent last week, with administrators Interpath left to clean up the mess.
But the DSIT recognition was just one outward sign suggesting a company far from collapse.
Cervest, which had received positive coverage in leading media outlets, continued to hire through 2023, with listings still going up in May. Former employees told the Standard that they received assurances that the firm had the funds to last into the second half of 2023, or beyond.
Last month, it announced a partnership with Accenture, taking part in an accelerator led by the consulting and IT giant. Days later, Cervest hailed work performed for DIY giant Wickes. Both of those events came after the last time UK employees were paid.
The company’s website and social media promote a webinar that was meant to take place yesterday. It did not occur.
Founder and CEO Iggy Bassi told the Standard these actions reflect the fact insolvency “wasn’t on the cards”.
In a message seen by the Standard, Bassi told staff in December of last year that Cervest had secured the first part of a two-phase funding deal with a group of investors including former T-Mobile boss John Legere, former Microsoft executive Mike Slade and prominent tech investor Zen Matoshi, who all joined the Cervest board.
Bassi told the Standard Cervest was confident more funding was imminent up until collapse. He didn’t reveal whether this would have been from Legere’s group.
Former employees said leaders told them additional funds from Legere fell through just before May’s announcement that they wouldn’t be paid.
A group led by Legere was registered as a creditor of Cervest in a fixed charge filed in early May.
But staff say Bassi didn’t explain May’s pay depended on funds that hadn’t arrived. They fear he’ll start another firm with similar issues. Filings show he was named director of newly founded Earthena.ai last week, alongside Cervest general counsel Raj Mahapatra
A spokesperson for a group of ex-board members, including Bassi, said: “Cervest has spent the last seven years, developing market-leading technology and expanding its operations globally in a drive to answer the critical issues facing our climate, and gained a lot of positive attention from businesses, governments, media and investors.
“Throughout this time the company and its board has placed huge value on the people within its business, ensuring that even through the recent, and very tough economic times, that staff have been supported - with jobs maintained and new roles created.
“We’re incredibly disappointed that external and unforeseen factors outside of Board control, have led to the unfortunate situation of Cervest going in to administration and staff not being paid.
“We have tried incredibly hard to ensure this did not happen and worked up to the eleventh hour to find a solution to keep the company moving forward and to meet its liabilities. Regrettably a viable solution could not be found.
“Finding workable positive responses to the climate crisis is incredibly important, and AI has a huge role to play in supporting business to make real impact.
“However, the financial requirements to develop the tools, technology and expertise is no small undertaking, and it is this investment challenge that has led to the position that Cervest finds itself in today.”
We have tried incredibly hard to ensure this did not happen and worked up to the eleventh hour to find a solution to keep the company moving forward and to meet its liabilities.
The administrators said: "The business had raised over $40m of investment through a number of funding rounds to develop and bring its ‘EarthScan’ platform to market. However, its latest funding round encountered significant challenges.
"Given the cash burn in the business and the funding requirements to operate the company and service existing contracts, the directors sought to explore options, including seeking alternative investment, as well as a potential sale of the business. Unfortunately, a solvent solution could not be found, and so the directors made the decision to seek the appointment of administrators."
The administrators have since sold Cervest’s intellectual property rights to rival Mitiga. Under the fixed charge, the business linked to Legere was the secured creditor for these assets. The intellectual property sale helped to wipe out debts associated with its connections to Cervest.
A DSIT spokesperson said of the list: “This is an example of the many business case studies which are used widely across government departments.
“It would be wrong to conclude the referenced post is anything more than an illustrative piece.”
Legere, Slade and Matoshi could not be reached for comment.
