Robotics startup cofounded by Synapse CEO raises funds with exaggerated GM claims
The GM logo is seen on the facade of the General Motors headquarters in Detroit on March 16, 2021.
Rebecca Cook | Reuters
“Foundation is building humanoid robots to take over work that humans do in factories, warehouses and eventually homes,” the startup declared.
On top of the seed investment, the fundraising document said GM was set to be Foundation’s first customer, with a targeted $300 million purchase order, and had also provided access to its factories to help them train its robots.
“GM agreed to let us collect the ground truth data in their factories,” Foundation said in the document. “Our team is in their Mexico factory this week to start the collection process. We would probably be the only company in this space with a dataset like this.”
But, according to GM and one of the startup’s founders, most of Foundation’s claims related to the automaker are exaggerated or untrue.
While GM met with Foundation executives a few times, it hasn’t allowed data collection from its factories, has no agreements for robot orders and isn’t planning an investment, according to a GM spokesman.
“GM has never invested in Foundation Robotics and has no plans to do so,” spokesman Darryll Harrison said in an emailed statement. “In fact, GM has never had an agreement of any kind with the company. Any claims to the contrary are fabricated.”
In a phone interview with CNBC, one of Foundation’s cofounders, Mike LeBlanc, confirmed GM’s points and said he was embarrassed that marketing materials existed that overstated their relationship.
“The engineering stuff we’ve done is really incredible, and it’s the bedrock of what this company will be,” LeBlanc said. “That, to me is what Foundation Robotics is.”
Foundation was started in April by Synapse CEO Sankaet Pathak, Tribe Capital CEO Arjun Sethi, and LeBlanc, cofounder of Cobalt Robotics, a maker of autonomous security guards, according to the company’s fundraising pitch.
It’s raising money at a time when American corporations look to automate more of their labor: 25% of capital spending by industrial companies in the coming years will be on automated systems, according to McKinsey.
The misleading fundraising pitch was shared in an email group with about 1,500 startup executives and investors this month, according to one of the recipients. The contents of the document were confirmed by someone with direct knowledge of Tribe Capital.
Tribe Capital and its cofounder Sethi declined to comment, while Pathak didn’t respond to messages seeking comment.
The robotics startup finds itself in the spotlight after the implosion of Pathak’s other company, Synapse, which enabled fintech brands like Mercury and Dave to offer banking services by connecting them to FDIC-backed banks.
Cofounded by Pathak in 2014, Synapse went bankrupt earlier this year after some of its largest clients, including Mercury, left its platform amid disagreements over customer balances.
The mess has left more than 100,000 Americans with a combined $265 million in deposits locked out of their accounts for more than a month, according to a trustee appointed to oversee the firm’s bankruptcy proceedings.
Making matters worse, there is an $85 million shortfall between what partner banks of Synapse are holding and what depositors are owed, and no answers yet on what happened to the missing funds, according to the trustee.
Pathak’s move to his next venture, coming on the heels of the still-ongoing Synapse failure, has raised eyebrows among some founders and investors in the startup community.
