VINAYA, the London-headquartered wearables startup that went into administration on December 12, emailed backers of its Indiegogo campaign on January 1 telling them that they won’t get the products they paid for.

The email (which can be read in full below) sent to the 1,308 people who backed VINAYA’s Indieogo campaign said “technically we are not liable, and you are not entitled to a refund, or even the product your ordered.”

However, an Indiegogo spokesperson told Business Insider that VINAYA’s email was a mischaracterisation of the site’s terms and conditions. Indiegogo said that its terms are there to protect backers – not companies. It said it will contact VINAYA to try to facilitate refunds.

Instead of the products people have paid for, VINAYA is offering backers equity in a new company run by the same founders.

A press statement released by VINAYA said that the company is considering moving to B2B, rather than the consumer model that it previously followed. The statement explains that CEO Kate Unsworth and VINAYA’s other cofounders acquired what remained of the company, and they will offer equity in a new business named Vinaya Limited to their previous investors, as well as their Indiegogo backers.

The only other option given to backers is to wait and see if the new company releases a product, and to get that instead. VINAYA says it will “gift you new product if and when released.”

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VINAYA’s closed Indiegogo campaign page was flooded with angry comments after the email was sent. “Wow, what a fraud,” said backer Linda Unternahrer. “They took money from me just two weeks ago and then gave my sister a lousy card for Christmas and a link to the webpage, and now this. I’ll never invest in Indiegogo again.”

Foto: One of VINAYA’s original Altrius wearable devices. source Lucy England

Business Insider spoke to Unternahrer about her reaction. She explained that she backed VINAYA with $159 (£129) after it reached 200% of its funding goal, “so I felt it was a safe investment,” she said. She described the email from VINAYA as “flippant” and said she intends to seek a refund from the company. VINAYA did not respond to a request for comment.

Another backer, Yvonne Coats-Branley, wrote “Wow they stole my money… not gonna invest in indiegogo anymore, and I’ve done dozens, it’s over..”

Andie Katschthaler, who also backed VINAYA, told Business Insider that “I found myself wondering if the whole thing was a scam from the get-go. After all, this isn’t just some small crowdfunding campaign run out of a garage that just happened to miscalculate out of sheer inexperience. This is a campaign by an existing company with existing products that got 239% funded and received more than $272,000 in contributions.”

Despite angry comments from backers, there’s no indication that VINAYA acted fraudulently. Instead, the company said in its press statement that it was about to sign a large B2B contract that was delayed. It caused a cash flow problem, Unsworth said, which pushed her company into administration.

VINAYA had appeared to have a bright future. The company described its products as “distraction management” tools that help customers to “filter out the noise.” Its Altrius devices are smart jewellery pieces that connect to a smartphone via bluetooth and only notify the wearer when a notification is deemed important enough.

And VINAYA had an all-star lineup of investors including Net-a-Porter cofounder Carmen Busquets, Tech City UK chair and Passion Capital partner Eileen Burbidge, Bebo founder Michael Birch, Localglobe partner Robin Klein, and Playfair Capital.

Here’s the full email sent by VINAYA to its Indiegogo backers:

“Dear Indiegogo backer, We’ve had a challenging 2 weeks. In short, the business had some unexpected, and unfortunately detrimental, cash flow issues mid-December and as a result, we had to close the company (please see this press statement for more info).

I’m incredibly disappointed that we weren’t able to deliver on our vision; this has been financially painful for all our investors, and obviously very difficult for the whole VINAYA team. The group of people that I’m most disappointed for however is you; the people, mostly complete strangers, who were excited and inspired by our vision, enough to actually give us your financial support.