Auckland AI startup Ambit’s collapse leaves a trail of debt and questions about the resilience of NZ’s tech scene.
Auckland AI company Ambit has gone into liquidation, defaulting on a $500,000 loan from the Callaghan Innovation fund, a Covid-era government scheme meant to support local businesses. The firm’s liquidators, Stephanie Jeffreys and Adele Hicks of Grant Thornton, have released an initial report highlighting the rapid decline of Ambit’s fortunes after the release of OpenAI’s ChatGPT in November 2022.
The ChatGPT Effect
Ambit’s business model was centered around providing AI-powered solutions for various industries, but the arrival of ChatGPT seemingly put the firm on ice. According to Warren, Ambit’s managing director, the impact was swift and far-reaching: “many customers now think that we’re no longer relevant.” This sentiment shift was a major blow, prompting Ambit to default on the loan.
The Callaghan Innovation Scheme
The Callaghan Innovation fund, a $150m government program, provided critical support to local businesses during the Covid-19 pandemic. However, as the economy recovered, the government initiated a crackdown on firms that failed to repay their loans or meet program requirements. Ambit’s liquidation is a warning sign that the tech sector is not immune to the consequences of defaulting on these loans.
What this means
Ambit’s collapse serves as a reminder that even the most promising AI startups can falter. As AI technologies continue to advance at breakneck speed, businesses must adapt quickly to stay relevant. For investors and policymakers, Ambit’s story highlights the importance of careful risk assessment and ongoing support for local businesses.
