None of the creditors are listed in the first report, bar major shareholder Bartok International.
In an earlier statement to the Herald, KPMG said it was a voluntary receivership, after a process that had included an attempted sale.
“The receivers intend to progress with the existing sales process and seek to find a buyer for the business and assets of the company,” KPMG said.
Cash in the bank and estimated intellectual property figures have been withheld from Bower and Norman’s first report as the attempt to sell the company continues.
The pair say they have also retained “key staff” as the sale process continues. The report does not say how many. It does say the receivers anticipate, at this stage, that preferential claims including wages and holiday pay will be paid in full.
Staff already gutted
There were signs of trouble in mid-2024 as accounts filed in the UK showed cash and equivalents of $12.3m and net cash outflows of $38.1m for the year ending March 31, 2023. (Soul Machines was deregistered in the UK in September 2024.)
Soul Machines’ headcount reduced from 253 in July 2023 to 70 by July 2024, according to LinkedIn Premium’s Insights tool, which also shows new hires tailing off after December 2022.
Immediately before the receivership, 45 staff were listed, including 15 in NZ.
Hero customers bail
Key early customer Mercedes-Benz had sold most of its stake and dumped Soul Machines’ tech by July 2024. Another hero customer, ANZ, had also ditched Soul Machines in favour of an inhouse-developed product. Air New Zealand also bailed.
Meanwhile, British Virgin Islands-registered Bartok International – a firm with a subterranean profile – had emerged as the largest single shareholder.
There was increasing competition in the world of AI-powered chatbots. Many of the newcomers did not have Soul Machines’ emotional smarts or visual finesse, but experts say customers didn’t care – as long as they were cheaper.
Clare Capital managing partner Mark Clare said at the time, “Companies who’ve had a credible standalone product for some time now find their offerings commoditised by the bigger players.”
A product could still be excellent, Clare said, but now faced new, often cheaper competition from the likes of OpenAI – whose ChatGPT burst into the mainstream in November 2022 – Microsoft, Google, Amazon and Anthropic, and a wave of startups building apps that incorporate their generative AI tools.
Before its receivership, Soul Machines had switched to selling avatars based on ChatGPT.
Soul Machines co-founder Greg Cross, who earlier acknowledged a wave of layoffs in 2023, quit as chief executive in September that year.
Fellow co-founder Dr Mark Sagar quit as a director in June 2024. Like Cross, he gave no reason for his departure and did not return requests for comment.
In April 2023, Cross told Forbes Australia the explosion in popularity of chatbots had led to a “challenging time” for companies in the sector.
Tim Warren, founder of AI chatbot and automation firm Ambit, said it seemed Soul Machines had shifted from being “a very high-end, very expensive offering” to a platform with consumer-friendly pricing. The firm didn’t appear to have landed anchor customers, or enough of them, to justify its valuation.
“They had unique IP and technology, but suddenly they’re in a crowd with everyone else.”
While Soul Machines’ avatars might be more emotionally responsive and realistic, many customers wanted “something cheap and commoditised”, Warren said.
Baby, I love your way
Sagar, a former Weta Digital whizz, served as the tech brains, and serial entrepreneur Cross created Soul Machines in 2016 as a spinout from Sagar’s work at the University of Auckland, where the academic created an AI-powered avatar of an infant, dubbed “Baby X”.
The idea was to create digital on-screen “humans” who could help firms with customer service, complete with facial expressions to empathise with a customer’s emotions.
Early hero customers, investors disengage
Soul Machines’ latest extensive shareholders list, released on December 4, shows Mercedes-Benz with a 1.6% stake, compared with 4.4% in July 2023.
The German firm took a 6% stake in the Kiwi start-up as it led the US$7m Series A round in 2018.
At the time, Mercedes was billed as an anchor customer. Today, it is not listed in a roster of hero clients.
Brands retire avatars
ANZ, Air New Zealand and Mercedes-Benz were also promoted as partners – their respective Soul Machines developed avatars dubbed “Jamie”, ”Sophie” and “Sarah”. This led Newstalk ZB host Mike Hosking to say: “Do you spot the problem? They’re all women.” Cross responded at the time that there were also male avatars; the choice sat with the client.
A spokeswoman for ANZ told the Herald in July 2024 that while the bank worked with Soul Machines to create personal banking assistant Jamie from 2018, “we ceased this function for customers in early 2022”.
And while Air New Zealand’s Sophie made her debut at an event in Los Angeles, the airline ended up going with its inhouse-developed Oscar, a much more straightforward effort. A spokeswoman said the airline is not using any Soul Machines technology.
The December 4, 2025 Companies Office update has Bartok as the largest Soul Machines shareholder with a 28% stake.
Minority shareholders (all 4% or below) included Sagar, Salesforce and Auckland University’s commercialisation arm, Uniservices.
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.
