Enterprise AI Startup Collapses After $11 Million Disappears: CEO Resigns, Staff Laid Off

Enterprise AI Startup Collapses After $11 Million Disappears: CEO Resigns, Staff Laid Off

On, an enterprise AI startup previously known as GameOn Technology, has laid off all of its estimated 60 staff members after allegedly discovering $11 million in cash was missing. On CEO Alex Beckman resigned, allegedly under pressure. A letter to shareholders from other company officers alleged they discovered to their “shock and horror” that only 37 cents was left in an account that was supposed to have $11 million.

The company, which previously said it had raised $35.5 million, billed itself as “the industry leading enterprise-grade conversational AI platform, trusted by the world’s leading brands in retail, sports, and media & entertainment.”

Beckman and Kalin Stanojev, chief product officer, founded the company in 2014 as GameOn Technology. In a letter to shareholders, the company’s board pressured Beckman to resign on July 1. On July 5, the company’s board investigated and concluded the account that should have had $11 million only had 37 cents.

The letter said the company’s probe of the bank accounts revealed that Beckman had used elaborate lies and deception to convince the board and management that On had approximately $11 million in one of its bank accounts. “This cash was critical to the ongoing operations of the company in which you invested,” the letter said. “To our shock and horror, we discovered that, in reality, the account balance in that bank was only 37 cents. This discovery left the company in a liquidity crisis, and the board and management were forced to act quickly, hoping to stave off bankruptcy.”

After a series of meetings over the weekend, the board and management determined that the company would need to pause operations and lay off nearly all of its workforce on Monday, July 8. The company, at that time, held approximately $550,000 in cash, much of which was deployed to pay for the “sudden terminations.”

Beckman confirmed with GamesBeat that he left the company in early July. He said he was not in a position to discuss the company’s decision to cease operations. “From the beginning, I’ve only wanted what’s best for the company and its employees. And I resigned because I believed it was in the best interest of the company. I am aware of a communication describing my departure. That communication contains a number of exaggerations and misstatements and does not paint an accurate picture of what happened,” he said. “I look forward to correcting the record, I’m providing the full story at the appropriate time.”

Beckman said he could not comment on whether there was litigation. He confirmed the company had raised $35.5 million in a couple of rounds, and that it grew to be more than 60 employees. He said he loved the company and this is an “incredibly painful time period.”

The board and management of On are evaluating options for the company, and the letter said it will update shareholders further as this situation develops.

This incident highlights the importance of strong financial controls and transparency in startups.