Albert Saniger, the founder and former CEO of Nate, an AI shopping app promising a “universal” checkout experience, has been charged with defrauding investors, according to the U.S. Department of Justice.
Founded in 2018, Nate raised over $50 million from investors like Coatue and Forerunner Ventures, with a notable $38 million Series A in 2021 led by Renegade Partners. The company claimed its app enabled users to buy from any e-commerce site with a single click, thanks to its AI technology.
However, the DOJ’s Southern District of New York alleges that Nate heavily relied on hundreds of human contractors in a call center in the Philippines to manually complete purchases. Saniger had raised millions in venture funding by claiming Nate transacted online “without human intervention,” except in edge cases where the AI failed. Despite acquiring some AI technology and hiring data scientists, the app’s actual automation rate was effectively 0%, according to the DOJ.
Nate’s use of human contractors was previously investigated by The Information in 2022. Saniger, currently a managing partner at New York VC Buttercore Partners, did not respond to a request for comment, nor did Buttercore Partners.
The DOJ’s indictment states that Nate ran out of money and was forced to sell its assets in January 2023, resulting in “near total” losses for its investors. Saniger’s LinkedIn profile indicates he was no longer CEO as of 2023.
Nate is not an isolated case of a startup allegedly exaggerating its AI capabilities. An “AI” drive-through software startup was found to be largely powered by humans in the Philippines, in 2023.
