Former Synapse CEO raises $11 million for his new robotics startup

SOPA Images/Photographer: SOPA Images/LightR

Sankaet Pathak, the founder and CEO of banking-as-a-service company Synapse, has raised $11 million for his new humanoid robotics startup Foundation, he told Techcrunch on Thursday. 

The fundraising news was surprising, given that Synapse, a company that acted as a go-between for banks and their fintech providers, filed for bankruptcy in April and an estimated $85 million of customer funds is missing amid disputes between the company and its bank partners. In the latest status report from Synapse’s bankruptcy trustee Jelena McWilliams, filed August 14, she said her team is still working with Synapse, Evolve Bank & Trust, Lineage Bank, American Bank and AMG National Trust to reconcile their ledgers and return customers’ money to them. 

“It really is incredible that VCs are willing to fund someone who just walked away from the bomb crater he created, leaving thousands of people without access to their money, while vacationing in the Mediterranean,” said Todd H. Baker, senior fellow at the Richman Center for Business, Law and Public Policy at Columbia Business School and Columbia Law School. “The AI frenzy seems to have addled the judgment of his VC backers.”

The primary investor in Foundation is early-stage venture firm Tribe Capital, according to Pathak. The Information reported in June that Pathak received a $10 million commitment from Tribe Capital, whose co-founder, Arjun Sethi, is also a co-founder of Foundation. A visit to Tribe Capital’s website yields a 403 error. The company and its leaders did not respond to requests for comment on LinkedIn. 

“It appears that Mr. Pathak may be joining the ranks of other CEOs — like Frank Lorenzo, Carl Icahn and Donald Trump — who continue to succeed despite having led their prior companies into bankruptcy,” said Michele Alt, a partner at Klaros Group. “Bankruptcy provides a powerful shield against creditors, and Synapse’s creditors are likely to see only pennies on the dollar when all is said and done.”

Alt said Pathak is unlikely to be found personally liable for any of his former company’s debts. He may be subject to legal sanctions if he is found to have committed fraud or broken any laws while at Synapse.

Dave Mayo — founder of Bankers Helping Bankers, CEO of FedFis and a longtime critic of banking-as-a-service middleware providers like Synapse — took Pathak’s funding announcement in stride. 

“Nothing surprises me anymore,” Mayo said. “He’s a businessman, and I think we often forget that banking is banking and fintech is business. We kind of lead down this path of swallowing the pill on innovation for the sake of innovation, and you get tinkering around with something that’s pretty important.”

In this case, he said, the banks involved may share some of the blame. 

But generally speaking, Mayo believes “there’s nothing in the connector model that will work, ever. We’ve got a whole industry that has been moved into what we call innovation and disruption. And actually what it is, is playing with fire.”