By Soumoshree Mukherjee
Once celebrated as a $1.5 billion AI unicorn, Builder.ai has now become a cautionary tale in the tech industry, filing for insolvency amid widespread allegations of fraud and misrepresentation.
The London-based startup, launched in 2016 by Sachin Dev Duggal, positioned itself as a no-code app development platform powered by artificial intelligence. With backing from Microsoft, SoftBank’s DeepCore, IFC, and the Qatar Investment Authority (QIA), Builder.ai marketed its flagship AI assistant, Natasha, as a revolutionary tool for automating software development with minimal human effort.
However, as reported by Bloomberg, the company’s image began to unravel when insiders and whistleblowers revealed that the platform’s so-called AI functionality was largely non-existent.
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Instead of AI, the platform relied on a workforce of approximately 700 engineers in India who manually built applications while the company maintained the illusion of automation. Linas Beliūnas, director at Zero Hash, publicly exposed the discrepancy, stating in a viral LinkedIn post: “It turns out the company had no AI and instead was just a group of Indian developers pretending to write code as AI.”
Concerns over Builder.ai’s claims had been circulating for years. As early as 2019, The Wall Street Journal reported that the company’s AI functionality appeared overstated. These doubts resurfaced with force in 2024, as internal audits and whistleblower reports revealed inflated revenue figures and financial misconduct.
One significant red flag involved a “round-tripping” scheme with Indian social media company VerSe Innovation (Dailyhunt’s parent firm), where both firms allegedly invoiced each other for similar amounts without actual exchange of services. Bloomberg confirmed that these transactions were used to mislead investors about the company’s financial health.
VerSe’s Co-Founder Umang Bedi denied the allegations, calling them “absolutely baseless and false,” asserting that his company never engaged in deceptive accounting practices. Builder.ai, however, declined to comment.
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The company’s unraveling accelerated when Viola Credit, which had extended a $50 million loan in 2023, seized $37 million from Builder.ai’s accounts earlier this year, leaving only $5 million in restricted funds. This crippled its ability to operate across key markets including the UK, U.S., UAE, Singapore, and India.
Founder and CEO Duggal subsequently resigned and is now under investigation in India for alleged money laundering. His replacement, Manpreet Ratia, confirmed to Bloomberg that the company had laid off its entire workforce and is now undergoing insolvency proceedings.
Builder.ai’s downfall not only wiped out QIA’s $250 million investment but also underscores a broader reckoning in the AI startup ecosystem. Experts like Phil Brunkard of Info-Tech Research Group point to a troubling trend of inflated valuations, lack of transparency, and overhyped AI capabilities.
