Ottawa startup GestureLogic files for bankruptcy protection
“It’s taking a toll from every angle,” said GestureLogic Inc. founder Leonard MacEachern.
“Disappointment would be an understatement.”
Since it was founded in 2013, the company has received plenty of attention and accolades for LEO, a high-tech monitor that measured everything from an athlete’s heartbeat to hydration levels via a fabric band worn around the thigh.
Despite the competitive nature of the “fitness wearable” market that includes players like FitBit and Nike, the company had some early success raising funds.
Investors included $250,000 from Carleton University chancellor Charles Chi, and another $250,000 from the Ontario Centres of Excellence.
The product had an expected release of April 2014, but Mr. MacEachern said the company ran into manufacturing complications.
Court documents indicate that at least $1.5 million would have been needed to bring the product to market, but when they approached investors for a second round of funding, support had dried up.
“Most wearable companies are raising in the order of $10 million. We didn’t raise that amount, it was mostly angel investments and friends and family,” said Mr. MacEachern.
On Wednesday an Ottawa judge granted the company time to sell their intellectual property, which could help cover the $1.9 million owed to investors.
A more complicated legal situation is the company’s 2014 crowd funding campaign that raised $143,709 in two months.
Even the lower tiers of the campaign were significant investments: more than a hundred people paid between $184 and $369 in exchange for a discount on a product that they aren’t likely to see.
“In the comments I see people who are asking for a refund, but I have no idea if that will ever happen,” said Sabina Vk, a crowd-funding contributor from the Netherlands who paid $184 to LEO.
“It has been extremely frustrating both the lack of progress and updates,” said Steve Spaulding, a contributor from the United States. “I don’t have that type of money to just throw away without getting what I expected to be paying for.”
Crowd-funding website Indiegogo doesn’t accept liability for failed projects, and Mr. MacEachern’s lawyer said they’re still examining the options.
“We hate to disappoint those people,” said Mr. MacEachern. “I’m trying to think of what I can do for those contributors.”