The Rise and Fall of Builder.ai: A Cautionary Tale in the AI Startup Boom
A story on how there will always be frauds in a new and emerging industry, trying to make quick money.
Builder.ai, once a promising UK-based startup, aimed to revolutionise app development using AI. Backed by major investors like Microsoft and Qatar's sovereign wealth fund, the company reached a valuation of $1.5 billion.
The company's pitch was compelling: democratize software creation by making it as easy as ordering a pizza. Their AI, named "Natasha," was marketed as a tool that could build apps without human intervention.
However, investigations revealed a different story. Instead of AI-driven development, it relied on over 700 engineers in India to manually create applications, effectively masquerading human labour as AI.
Financial discrepancies further marred the company's reputation. In 2024, it reported revenues of \$220 million, but audits uncovered actual revenues of only \$50 million. Techniques like "round-tripping" with partners such as VerSe Innovation were allegedly used to inflate financial statements.
The fallout was swift. In May 2025, Builder.ai filed for Chapter 7 bankruptcy in Delaware, revealing debts to over 200 creditors and liabilities up to \$100 million against less than \$10 million in assets. Notably, unpaid bills included those to private intelligence agencies and legal firms.
Leadership turmoil added to the chaos. Founder Sachin Dev Duggal stepped down as CEO in early 2025, retaining the title of "Chief Wizard." His departure came amid legal challenges, including investigations by the U.S. Attorney’s Office into the company's financial practices.
Employee accounts painted a grim picture of the internal culture. Reports highlighted issues like delayed payments, lack of transparency, and a toxic work environment. Some employees claimed that projects were often left incomplete, and customers were misled about the capabilities of the platform.
The Builder.ai saga underscores the risks of overhyping technological capabilities and the importance of transparency. As the AI industry continues to grow, stakeholders must exercise due diligence to distinguish genuine innovation from mere marketing.
For investors and entrepreneurs, Builder.ai serves as a stark reminder: in the race to capitalise on emerging technologies, integrity and accountability should never be compromised.
Stay informed and sceptical. Not all that glitters in the world is gold.
Disclaimer:
This content is for educational purposes only and should not be construed as investment advice. The analysis is based on publicly available information and our internal research. We are not recommending any action (buy, sell, or hold) on any stock. Please consult your financial advisor before making any investment decisions. We may or may not have a position in the stocks discussed.