Slicing corners: Builder.ai promised to revolutionize software program growth with synthetic intelligence – and satisfied deep-pocketed buyers it had. Backed by Microsoft and valued at $1.5 billion, the startup masked handbook labor as machine studying till the facade crumbled, abandoning lawsuits, layoffs, and one of many business’s most embarrassing collapses.
Builder.ai has collapsed underneath the load of a number of deceptions, ending the rise of a British startup as soon as heralded as a pioneer in democratizing software program growth. Valued at $1.5 billion in 2023 with backing from Microsoft and Qatar’s sovereign wealth fund, the corporate filed for chapter safety this week after revelations that its “AI-powered” platform relied on a whole lot of engineers in India whereas executives allegedly orchestrated a years-long monetary deception.
For eight years, Builder.ai marketed its “Natasha” AI system as a completely autonomous device that would construct software program “as simply as ordering pizza.” Nevertheless, inner paperwork and worker accounts reviewed by Bloomberg paint a sharply totally different image. Engineers in Noida and Bangalore manually coded shopper tasks whereas being instructed to imitate AI-generated responses.
“We had been instructed to by no means point out our location or use Indian English phrases,” mentioned a former Bangalore engineer.
The workforce timed updates to UK enterprise hours to take care of the phantasm of automation.
The corporate’s downfall accelerated in April 2025 when Bloomberg uncovered a round-tripping scheme with Indian social media agency VerSe Innovation. From 2021 to 2024, the 2 corporations exchanged almost similar invoices totaling tens of millions of {dollars} for companies by no means rendered, artificially inflating Builder.ai’s income by as much as 300 p.c. Audits later revealed 2024 revenues totaled simply $55 million – a fraction of the $220 million projected to buyers. VerSe co-founder Umang Bedi denied the allegations, calling them “completely baseless.”
Microsoft’s $455 million funding in 2023, together with plans to combine Builder.ai’s expertise with Azure, now stands as a cautionary story. The partnership fell aside when creditor Viola Credit score seized $37 million from Builder.ai’s accounts after uncovering inflated financials, leaving solely $5 million in restricted funds. The startup additionally owes $85 million to Amazon and $30 million to Microsoft for cloud companies.
The US Legal professional’s Workplace for the Southern District of New York has subpoenaed monetary data and buyer lists as a part of a widening probe into potential securities fraud. Individually, the SEC is investigating whether or not Builder.ai misrepresented its technological capabilities to buyers. Inside Slack messages present executives directing workers to “reduce visibility” of human labor in investor supplies.
“Positioning should concentrate on our proprietary AI – human labor is not a part of the story,” a 2022 inner memo acknowledged.
Founder Sachin Dev Duggal, who styled himself Chief Wizard, resigned as CEO in February 2025 amid mounting losses and relocated to Dubai. His alternative, Manpreet Ratia, disclosed that the corporate laid off roughly 80 p.c of its international workforce – about 1,000 staff. The insolvency marks probably the most important AI startup failure to happen since ChatGPT’s breakthrough debut in 2022, underscoring rising scrutiny of “AI washing” throughout the tech sector.
