SEC Charges Skael Founder With Inflating Automation Startup’s Revenue
The co-founder of business automation startup Skael has been accused of illegally inflating its revenues.
Baba Nadimpalli, who had also been the CEO of the defunct company, was indicted Tuesday (Sept. 24) by a federal grand jury in San Francisco on charges of securities and wire fraud. He has also been charged with fraud by the U.S. Securities and Exchange Commission (SEC).
“Startup founders cannot fake it until they make it by falsifying revenue metrics shared with investors,” Monique C. Winkler, director of the SEC’s San Francisco Regional Office, said in a news release.
“While the SEC will continue to aggressively pursue private company executives who use falsehoods to raise money from investors, we also urge those who invest in private companies to remain vigilant.”
According to the indictment, Skael raised more than $40 million between 2020 and 2022 across three funding rounds, with Nadimpalli making false claims about the company’s revenues.
Prosecutors also allege that Nadimpalli falsely suggested to investors that his firm’s customers included a number of well-known companies, and that the CEO forged bank statements to show nonexistent payments from customers.
“Nadimpalli also allegedly spent hundreds of thousands of dollars of SKAEL’s money on his own personal expenses, including payments on his house and car,” the SEC said.
The commission also noted that the CEO claimed Skael “had millions of dollars in annually recurring revenue, which was more than 10 times the true amount.”
Nadimpalli, a resident of Australia, could not immediately be reached for comment by PYMNTS.
Skael, which was in business from 2016 to 2022, helped clients automate repetitive tasks. And no matter the truth behind the company’s operations, businesses are increasingly turning to technologies to ease the burden of manual work and fragmented workflows.
Among these technologies is robotic process automation (RPA), which is helping modernize AP and AR departments, enable more efficient operations, and better cash flow management help companies survive in a competitive market.
“For many SMBs, the challenge in AP/AR lies in dealing with the volume and variety of documents, many of which are still paper-based or siloed across disparate systems,” PYMNTS wrote recently, pointing to research showing that 75% of companies still use paper checks.
“RPA offers a way to automate data entry, verification, and processing, thus reducing the manual labor and potential for human error associated with these tasks.”
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