MONTREAL — Until its bankruptcy in 2019, Carrot Rewards, which gave users loyalty points for making healthy lifestyle choices, was one of Canada’s most popular apps. Now a group of former Carrot executives is relaunching the concept in the U.K., with ambitions to eventually bring it back to Canada.

The team behind the new company, Caterpillar, includes Carrot Rewards’ former co-founder and chief product officer, Sarah Richard; its former chief financial officer, Jeff Irwin; and former vice president of technology, Chris Kelly. Caterpillar already has a test version of its platform available, which launched in Leeds, U.K. on June 6.

“We’ll be using a lot of that academic information from the actual Carrot initiative to show the power of this when it’s properly done,” said Peter Ellis, Caterpillar’s chairman and a previous investor in Carrot. “The dynamics and the geography of the U.K. and Canada are not that different.”

Like Carrot, Caterpillar’s business model is based on the idea that it can save governments money on health-care costs by rewarding people for physical activity. Its pitch deck identifies U.K. health agencies as its potential customers, with the general public as the users. Partnerships with reward providers will give the platform incentives that it can distribute to users who complete activities aimed at promoting health and fitness. 

Caterpillar would earn revenue from the agencies, which pay it a quarterly subscription fee per user, according to a pitch deck reviewed by The Logic. Carrot, in contrast, got paid only when users actually consumed the loyalty points they earned.

Carrot’s popularity in Canada was due partly to the size of the partners it was able to bring on board. Whereas Carrot offered incentives like Aeroplan miles and Cineplex Scene Points, Caterpillar is eyeing partnerships with major British retailers including Costa Coffee and pharmacy chain Boots for its supply of rewards, according to the deck.

In March, Caterpillar raised £450,000, or roughly $700,000, in seed funding from Jenson Funding Partners, a London-based investment firm. Although it plans to focus on the U.K. to start, the company hopes to expand to other English-speaking countries with single-payer health care systems, including Canada, Ireland, Australia and New Zealand, according to the pitch deck.

Caterpillar’s CEO is Paul Baverstock, a former Carrot employee in the U.K. who was once considered as a potential replacement for Carrot founder and CEO Andreas Souvaliotis before the company shut down, Ellis said. “I’m crossing fingers for them,” Souvaliotis told The Logic.

Carrot, which launched in 2016, became one of the most popular apps in Canada, with more than a million downloads and customer sign-ups from the governments of Ontario, B.C., the Northwest Territories and Newfoundland and Labrador. It drew financial backing from the federal government as well as private investors such as Relay Ventures and Portage Ventures CEO Adam Felesky. (Relay Ventures is also an investor in The Logic.)

The company encountered trouble when Ontario’s progressive conservative government was elected in 2018 and premier Doug Ford ended the provincial government’s relationship with the startup. After failing to raise more money, Carrot went bankrupt in the summer of 2019.

Since then, its assets, including troves of data about its customers, have changed hands various times. After falling apart, Carrot sold its user data to Toronto-based personal finance startup Planswell, but Planswell soon went bankrupt itself. The data was ultimately bought by Optimity, which used it to relaunch Carrot under its own brand.

The transfer led to disagreement between Optimity and Carrot’s creditors, who believed the new owner had an obligation to repay them for more than $11 million in losses. Jane Wang, Optimity’s CEO and co-founder, has said her company did not inherit any of Carrot’s creditor liabilities. Optimity didn’t respond to an email requesting comment.

Optimity relaunched Carrot under its own brand in December 2020, marketing the app to a million former Carrot users and hundreds of thousands of others who signed up for a waitlist.

Correction: This story originally included imprecise information on Planswell’s purchase of Carrot’s user data. The story has been updated.