Soul Machines raised $225M for premium AI avatars, then folded owing $19.6M

Soul Machines, the Auckland-founded maker of AI-powered virtual customer-service people, placed a notice on its website on 5 February 2026 putting the company into receivership. Founded in 2016 as a spinout from Mark Sagar's University of Auckland work on 'Baby X', it had raised about $225 million in venture capital. The receivers' first report put liabilities at $11.4 million to secured creditors, at least $7.8 million unsecured, and $360,000 preferential, including staff wages.

The trouble had shown by mid-2024: British accounts showed cash of $12.3 million against net outflows of $38.1 million for the year to March 2023, and the UK entity was deregistered that September. Key early customer Mercedes-Benz had sold most of its stake and dropped the tech by July 2024. ANZ, which had run the 'Jamie' banking assistant since 2018, ceased it for customers in early 2022 and later built in-house; Air New Zealand's 'Sophie' gave way to the airline's own 'Oscar'.

A wave of generative AI competitors — OpenAI, Microsoft, Google, Amazon, Anthropic and startups building on their tools — offered products with less emotional intelligence and visual finesse, but customers didn't care as long as they were cheaper. Ambit founder Tim Warren said the firm seemed to have shifted from a very high-end, expensive offering to consumer-friendly pricing without landing enough anchor customers to justify its valuation.

None of the celebrated pilots graduated: NZ Police's 'Ella', ANZ's 'Jamie', Air New Zealand's 'Sophie' and Mercedes-Benz's 'Sarah' stayed trials.

Generative AI chatbots undercut on price after ChatGPT hit the mainstream; buyers chose cheaper over finer.

The pivot from premium enterprise offering to consumer-friendly pricing never landed anchor customers at the new level.

Cash burn of $38.1 million a year against $12.3 million in the bank left no runway to wait out the platform shift.

When a platform shift arrives, customers stop paying a premium for polish the baseline product now gives away free — price positioning has to survive the new floor.

The receivers retained key staff while a sale process continues; preferential claims including wages and holiday pay are expected to be paid in full.