Albert Saniger, the creator and previous CEO of Nate, an AI shopping app that promised a universal checkout experience, was charged with defrauding investors on Wednesday, according to a press release from the United States Department of Justice.Founded in 2018, Nate raised over $50 million from investors like Coatue and Forerunner Ventures, most recently raising a $38 million Series A in 2021 led by Renegade Partners.Nate said its apps users could purchase from any e-commerce website with a single click, thanks to AI.
In reality, however, Nate relied heavily on hundreds of human contractors in a call center in the Philippines to by hand complete those purchases, the DOJs Southern District of New York alleges.Saniger raised millions in venture financing by claiming that Nate was able to transact online without human intervention, except for edge cases where the AI stopped working to complete a transaction.
But despite Nate obtaining some AI technology and working with data scientists, its apps actual automation rate was efficiently 0%, the DOJ claims.Nates heavy use of human specialists was the subject of an investigation by The Information in 2022.
Saniger didnt react to a request for comment.
He is presently listed as a handling partner at New York VC Buttercore Partners, which didnt react to a request for comment either.The DOJs indictment says that Nate lacked money and was forced to offer its possessions in January 2023, leaving its financiers with near total losses.
Albert Sanigers LinkedIn profile shows he was no longer CEO as of 2023.
Nate isnt the only startup that has apparently overstated its AI capabilities.
An AI drive-through software start-up was also powered mainly by people in the Philippines, The Verge reported in 2023.
More just recently, Business Insider reported that an AI legal tech unicorn, EvenUp, used human beings to do much of its work.