Foundation robot startup runs out of cash after founder borrows millions

Foundation Future Industries, a maker of military humanoid robots advised and backed by Eric Trump, failed to pay its employees last month as its cash reserves dwindled, according to people with direct knowledge of the matter.

The workers have yet to receive a paycheck after the San Francisco-based Foundation failed to pay their payroll on Oct. 30, said the people, who requested anonymity to speak candidly about a private company.

The situation particularly angered some within the startup because its CEO and co-founder, Sankaet Pathak, borrowed $4.6 million from the company last year to buy a luxury home, money that could have been used to pay workers, the sources said.

Public records show that an LLC that names Pathak as sole director purchased a $4.6 million property in Sausalito, California, with “panoramic, cinematic views” of the San Francisco Bay in October 2025.

A spokesperson for Pathak acknowledged receiving a detailed list of the main points of this story on Thursday, but did not respond to requests for comment. Pathak’s previous startup, a financial technology company named Synapse, collapsed in 2024, leaving thousands of Americans locked out of their savings accounts.

The Foundation’s cash crunch comes at a precarious time for the company, which Pathak says is close to unveiling a next-generation weapons-ready robot that will help the United States compete with its Chinese rivals. At the same time, Pathak is looking to raise hundreds of millions of dollars in funding at a valuation of $3 billion.

The company made headlines this year due to Pathak’s claims that its robots could soon perform battlefield tasks in Ukraine or patrol the U.S.-Mexico border. Interviews and articles released about the Foundation also include claims that the company won $24 million in Pentagon contracts.

“What we are about to unveil in the next few months will be the most powerful humanoid robot that exists in the world, including China,” Pathak said in a television interview in April.

This April interview featured Eric Trump, the US president’s son, as the Foundation’s investor and chief strategic advisor. It is not clear what the extent of his involvement is.

Eric Trump and his brother Donald Trump Jr. have invested in various defense companies, including makers of military drones and autonomous weapons. A Washington Post investigation in July found that startups backed by investment vehicles linked to the brothers had secured at least $3.2 billion in government business.

“We have to win robotics in the United States of America,” Eric Trump said in April. “When you go up and interact with these robots…they fist bump you, they wave at you, they follow your orders.”

Eric Trump’s involvement in the Foundation drew the swift ire of Sen. Elizabeth Warren, Democrat of Mass., who questioned whether the Foundation won U.S. defense contracts because of nepotism.

“Eric Trump went on FOX to brag about winning ANOTHER multi-million dollar contract from the Trump administration,” Warren said in an April 23 social media post. “This looks like corruption in plain sight.”

Eric Trump did not respond to requests for comment. His spokesperson recently told the Financial Times that Eric Trump had “no involvement in the management, operations, strategic decisions, or business activities of the Foundation, including the solicitation, negotiation, procurement, or execution of any government contracts.”

While Eric Trump’s announcement created speculation within the Foundation that a Democratic-led Congress might seek to investigate the company, the Foundation itself did not actually win the $24 million in contracts, although that claim was widely reported in the media.

Instead, it acquired Florida-based Boardwalk Robotics in late 2024, and government research contracts won by that company explain that claim, a person with knowledge of the matter said. The Foundation used Boardwalk’s Alex robot as the basis for its first robot, the Phantom MK-1, this person said.

The Foundation’s deal for Boardwalk included performance milestones for the robot that were not met, said another person with direct knowledge of the deal.

In 2024, CNBC reported that letters sent by Pathak to potential investors indicated an imminent investment and a $300 million purchase order from Pathak. General enginesclaims automaker rejected.

Foundation co-founder Mike LeBlanc said at the time that he was “embarrassed” by the marketing materials.

Insiders worry that the Foundation could soon close its doors if Pathak does not secure new funding. Pathak has been seeking to raise hundreds of millions of dollars at a valuation of $3 billion since at least January.

Pathak is the sole member of the Foundation’s board, a structure that has raised concerns among potential investors over corporate governance, people familiar with the matter said. He also owns most of the company’s stock.

That setup allowed Pathak to borrow $4.6 million last year, which he characterized at the time as a short-term loan, the sources said. Existing investors are aware of the loan through the company’s financial information, the sources said.

“This is what happens in a company without governance,” said one of the people present. “Are you just going to let it sink into the ground and ride off into the sunset?”

The Foundation also ran out of cash to pay salaries in August, although employees only had to wait about two days to get paid after the company secured a bridge loan from an existing investor, the sources said.

Pathak told employees in a memo this week that he was working to find money to reimburse salaries.

The company was founded in April 2024 by Pathak, Arjun Sethi, CEO of Tribe Capital, and LeBlanc, co-founder of Cobalt Robotics, a maker of autonomous security guards, according to a fundraising pitch from the time.

The Foundation then hired dozens of robotics engineers and artificial intelligence experts, managing to attract some of them. Tesla And AmazonZoox, a company-owned autonomous vehicle company.

Prior to the Foundation, Pathak was known as the founder of Synapse, a conduit of sorts that enabled fintech companies like Mercury, Dave and YieldStreet to offer savings accounts and credit cards with the help of small community banks.

Synapse was a behind-the-scenes player until its collapse left more than 100,000 Americans with a total of $265 million in deposits frozen in their FDIC-backed accounts.

While some customers received partial payments during Synapse’s bankruptcy proceedings, thousands remain without access to their money after more than two years. A bankruptcy trustee, former FDIC Chairwoman Jelena McWilliams, said as much as $96 million in customer funds went missing.

The bankruptcy proceedings ended last year without finding out where the funds went; Pathak blamed a banking partner named Evolve, and Evolve blamed Synapse for the mess. U.S. regulators didn’t intervene until the Consumer Financial Protection Bureau took Synapse to court last year, opening a $55 million fund to help customers.

Pathak withdrew $320,000 in loans from Synapse as the company headed toward bankruptcy in 2024 amid disputes over unmatched records, according to independent consultant and journalist Jason Mikula.

Federal prosecutors have convened a grand jury to investigate possible criminal misconduct at Synapse, The Wall Street Journal reported last year. The WSJ report does not specifically mention Pathak.

The controversy did not deter Eric Trump from investing in Foundation and Pathak, whom he called a friend during the interview that aired in April.

“I walked into his factory and I couldn’t believe what I saw,” Eric Trump said. “I’m telling you, he’s doing a phenomenal job.”