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Wellness app Carrot Rewards, which had over one million users, has shut down

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On Tuesday morning, the Toronto-based firm sent an email, obtained by The Logic, detailing its plan to shut down the app on Wednesday morning and its office by the end of the week. Then,  reached by phone Tuesday evening, CEO Andreas Souvaliotis said a last-minute buyer had stepped forward; he claimed nothing would be closed.

“There is a buyer that has been identified,” said Souvaliotis. “We are in a conversation, which warrants stopping the presses on what we had planned to do.” But on Wednesday, the company sent another email, saying the app had been shut down.

Carrot Rewards allowed users to earn points toward popular rewards programs by hitting walking goals and taking quizzes on topics like wellness.

The company had been looking for a buyer since April. It hired EY to do so at a $20-million sale price, according to a source with knowledge of the company. On May 1, Carrot lost the ability to issue Aeroplan points. Carrot also had difficulties with Cineplex and Scotiabank’s Scene loyalty program, to which it owes over two million dollars, and the company is filing for bankruptcy, according to the source.

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“It breaks our hearts to be saying farewell to you as we have closed down the Carrot Rewards app today. Just like so many other young start-up ventures, our beautiful Carrot needed investment funding to keep running — and, even though we gave it our all, our funds eventually ran out and we could no longer be in business,” reads the Wednesday email, which was signed by Souvaliotis.

Souvaliotis did not reply to multiple requests for comment on what the app’s closure means for existing users, or whether the firm still intends for its office to be “permanently closed at the end of the week,” as the Tuesday email said it would be. A number of users on Twitter said they had paid for a full-year membership and asked for their money back. A post on the company’s website did not speak to refunds for membership but did indicate users will be able to keep points they’ve earned that have been processed.

At various times, Carrot had partnerships with the Ontario Lung Association, pharmaceutical company Boehringer Ingelheim, the Canadian Bankers Association, Diabetes Canada and insurer Sun Life Financial.

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The app was first launched in British Columbia in 2016, and was developed with funding from the provincial government. The federal and Ontario governments also backed the company. The Public Health Agency of Canada gave it $2.42 million in the 2017–2018 fiscal year, according to the firm’s federal lobbying registration. And, in July 2017, Ontario announced $1.5 million in funding for the startup to make the app available in the province.

Over the last seven months, Carrot also sought further government support. In November 2018, chief financial officer Jeff Irwin registered to lobby the federal government for funding “for marketing and promotion,” and for its rewards platform to be integrated into unspecified government programs. In May, the company communicated with Immigration Minister Ahmed Hussen; the previous month, it communicated with staff in the offices of National Revenue Minister Diane Lebouthillier, Innovation Minister Navdeep Bains and Labour Minister Patty Hajdu.

In addition to government funding, Carrot also received backing from Toronto-based VC firms Relay Ventures and Lumira Ventures.

In November 2018, the company launched a new monetization strategy in Ontario, selling users monthly and yearly subscriptions to increase the number of points they received for hitting their step targets.

In January, Carrot announced a partnership with Public Health England to take the app to England starting in spring 2019, the company’s first overseas expansion. In February, the firm was chosen as the global winner of the OECD’s 2019 Edge of Government Award.

And, on May 29, Carrot Rewards launched a partnership with the Northwest Territories, offering a territory-exclusive rewards option called Aurora Rewards.