A health social enterprise that received £300,000 through a Big Society Capital-backed fund has shut down after the investment intermediary involved in the deal requested a winding-up notice for the non-payment of interest on a loan.
The health social enterprise Buddy Enterprises was set up in 2012 to provide digital tools that support therapy services. One product allowed patients to use text messaging to keep daily diaries of what they were doing and how they were feeling. It was used by 12 NHS trusts and a range of private and third sector organisations.
In 2013, BSC, the government-backed social investment wholesaler, invested £10m in the investment intermediary Impact Ventures UK to provide growth capital for social enterprises. In May 2014, Impact Ventures UK invested £300,000 in Buddy.
But on Tuesday a petition to wind up Buddy was published in The Gazette, the official public record of certain statutory notices, including those relating to insolvency.
The notice says the winding-up petition was requested by a creditor called LGT Capital Invest, which is a partner in Impact Ventures UK alongside the bank Berenberg.
An informed source told Third Sector that the winding-up notice was issued after the non-payment of interest, believed to be less than £10,000. The source said Buddy had struggled to secure deals with NHS trusts because of ongoing budgets cuts and efficiency savings in the health service.
Buddy's unaudited accounts show that it made a loss of £100,721 in the financial year ending 28 February 2015.
The source said Buddy had been unable to secure "patient investment and follow-on funding from its current investors". They said it was felt that the investors acted in an "anti-social impact" way.
The Impact Ventures UK website says Buddy employed eight people, but Third Sector understands that staffing numbers have gradually reduced over the past year and Buddy’s chief executive, Syed Abrar, and its client director, Kat Cormack, were the only two remaining staff members when it was closed.
Both Abrar and Cormack have been made redundant.
Abrar said in a statement: "I am deeply disappointed we could not, despite our best efforts, find the funding or reach a mutually beneficial agreement with our investors to continue supporting our beneficiaries. Over the last three years, we have made a huge difference to many people’s lives, and the feedback we received from NHS clinicians and patients was overwhelmingly positive. As a team we would like to thank all our supporters, including the services we have worked with, staff and other stakeholders."
Impact Ventures UK said in a statement: "We have been instructed that, due to a clause in the shareholders’ agreement, it is not possible for IVUK, or anyone else, to make a comment."
Impact Ventures UK said that the clause did not permit parties to make public statements without the written consent of all the stakeholders.
Keith Starling, interim chief executive of BSC, said in a statement: "We are confident that the intermediaries we invest through do all they can to support the organisations they invest in and ensure positive social impact."