Workforce training platform Uvaro acquired coding school Lighthouse Labs this past January.
This past January, Kitchener-Waterloo, Ont.-based workforce training platform Uvaro acquired coding school Lighthouse Labs for an undisclosed amount, making it a subsidiary. Just over seven months later, both have filed for bankruptcy.
As first reported by Canadian Cyber in Context, the two companies filed a bankruptcy notice to creditors on Aug. 1 and appointed professional advisory firm GlassRatner as their trustee. Both the Uvaro and Lighthouse Labs’ websites now redirect to their trustee page, which contains bankruptcy documents and a frequently asked questions (FAQ) document for creditors and stakeholders.
According to the FAQ, the companies lacked sufficient funding to continue operations and had limited assets to secure additional financing. The bankruptcy documents indicate Uvaro raised capital to fund the Lighthouse Labs acquisition, then started to burn cash when its forecasted sales pipeline and government contract awards didn’t come to fruition within its predicted timelines.
When Uvaro declared bankruptcy, both companies’ operations ceased immediately, including digital skills courses that were already in session, and their assets became vested in the trustee.
Uvaro acquired Lighthouse Labs earlier this year to take on the AI-augmented job market.
Founded in 2013, Lighthouse Labs was a tech education company that claimed to have trained over 40,000 learners since its inception through full-time and part-time programs that teach skills in cybersecurity, data science, data analytics, and web development. Uvaro provided similar skill development and career services, but without the technical focus.
Uvaro said it acquired Lighthouse Labs as part of a strategic move to align with job market trends, which were affected by the advent of artificial intelligence (AI), pointing to the Government of Canada’s launch of AI-focused programming and investments in digital skills training.
Lighthouse Labs had about $10 million in annual revenue, and acquiring it “presented a strong sales pipeline and projected growth” that would underpin the post-closure financial model, according to Uvaro’s notice of bankruptcy. However, the filing indicates those pipeline opportunities didn’t materialize, creating a significant revenue shortfall as Uvaro faced rising fixed costs and the resulting “rapid cash erosion.”
Lighthouse Labs’ filing mentions much of the same. It describes a $10-million-revenue business with a strong sales pipeline, but says it expected to secure at least $3 million in new partnership revenues from delayed government contract awards by the end of Q2 or early July. However, following Q2, these “key pipeline opportunities failed to materialize or close within forecasted timelines,” according to the filings.
Lighthouse Labs historically received funding from government programs. In 2023, it received over $20 million in federal funding to make its courses available to 1,700 Canadians at no cost.
“Despite aggressive cost-cutting measures, restructuring efforts, and attempts to pursue bridge financing and strategic partnerships, the company was unable to secure the additional liquidity to remain solvent,” both companies said in their bankruptcy notices.
BetaKit has reached out to Uvaro CEO Joseph Fung and Lighthouse Labs CEO Jeremy Shaki for comment. Shaki declined to comment, saying only he had been let go and was not an officer of the company when it decided to file for bankruptcy. Fung did not respond.
According to Lighthouse Labs’ creditor package, the coding school has nearly $230,000 in assets, and liabilities exceeding $3 million. Its largest creditor is RBC, with Lighthouse Labs’ assets securing a debt of nearly $1.6 million. The company also owes “various employees” more than $500,000, and the Canada Revenue Agency almost $140,000.
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Uvaro’s filings indicate it has nearly $1.6 million in assets and $5.7 million in liabilities. The company has $915,000 in cash on hand, and its software platform is valued at $276,000. The company owes “various individuals with promissory notes” just over $710,000, as well as more than $400,000 to secured creditor Bonsai Growth Solutions. Uvaro’s Lighthouse Labs subsidiary is also its largest claimant, to which it owes $3.8 million. Shaki told BetaKit that Lighthouse Labs is listed as a creditor because its owners are still owed money from the acquisition deal.
Just after the acquisition, Fung told BetaKit that the best practices for upskilling courses in tech were “getting thrown out the window” due to AI. Uvaro focused on using AI and upskilling in front-of-office roles like sales and marketing, while Lighthouse Labs concentrated on upskilling in development, software, and building AI technologies. Bringing the two companies together completed the full set of upskilling work, Fung said. Shaki echoed the sentiment, saying Lighthouse Labs had to adjust or pivot in a job market changed by COVID-19, remote work, and the advent of consumer-facing AI tools.
“With everything accelerating with AI, I just felt like it was important that Lighthouse wasn’t doing this alone anymore,” Shaki said at the time, adding that the next few years were going to be pivotal for the combined company to start understanding the new skills needed in the ever-changing job market.
Lighthouse Labs’ approximately 40 employees joined the combined company following the acquisition, operating as a Uvaro subsidiary under the leadership of Shaki, who also became Uvaro’s chief revenue officer. According to the filings, all employees from both companies have been terminated as a result of the bankruptcy.
According to the stakeholder FAQ document, terminated employees are eligible to make a claim through the Wage Earner Protection Program for unpaid wages, vacation pay, termination pay, and severance pay. Students who had their course access revoked may also make a claim with the trustee for incurred losses. GlassRatner, the trustee firm, said it is working with former management and regulators to finalize the transfer of student records and course completion certificates, and will provide updates when available.
Feature image courtesy Lighthouse Labs.