“Builder.ai’s AI Illusion Shattered—700 Engineers, Bankruptcy & a Looming Probe!”
Founded in 2016 by Sachin Dev Duggal, Builder.ai — which was formerly called Engineer.ai — set itself up as a no-code platform powered by artificial intelligence (AI) to make app development easier. Based in London and supported by big investors like Microsoft, the Qatar Investment Authority, SoftBank’s DeepCore, and IFC, the startup claimed it could make software creation “as easy as ordering pizza”. Its highly promoted AI assistant, Natasha, was advertised as a revolutionary tool that could create software with very little human involvement.
At its highest point, Builder.ai secured over $450 million in funding and reached a valuation of $1.5 billion. However, the shiny image of the company hid a very different truth.
Behind the scenes: 700 engineers, not AI-:
Actually, Builder.ai’s development was done by around 700 human engineers in India. These engineers were the ones who really wrote the code for client projects, even though the company made it seem like it was created by AI.
The illusion started to fall apart when industry experts and insiders, like Linas Beliūnas from Zero Hash, publicly accused Builder.ai of fraud. In a post on LinkedIn, Beliūnas stated: “It turns out the company had no AI and instead was just a group of Indian developers pretending to write code as AI.”
Red flags as early as 2019-:
Builder.ai’s claims about AI had been met with doubt for a long time. A 2019 investigation by the Wall Street Journal revealed that most of the coding was done by hand, with the AI features being largely overstated.
Former worker Robert Holdheim took legal action against the company for $5 million, saying he was let go after raising alarms about dishonest practices. Legal documents showed that Builder.ai had misled investors by stating that apps were ‘80% built’ by AI, even though the technology was hardly working.
Other former employees later confirmed that the company was ‘all engineer, no AI’.
Financial troubles and collapse-:
In early 2025, a change in leadership saw Manpreet Ratia take over as CEO from Duggal to try to win back investor trust. However, Ratia found out that the company had greatly exaggerated its 2024 revenue — claiming it was $220 million when the real income was closer to $50 million.
An independent audit revealed the difference, leading lender Viola Credit to take $37 million from Builder.ai’s accounts. With only $5 million left in restricted funds, the company’s operations in five countries — including India, the UK, and the US — came to a halt.
Due to regulatory issues stopping new funding, Builder.ai couldn’t pay its employees, resulting in nearly 1,000 layoffs.
Claims of money mismanagement – :
Additional investigations indicated that Builder.ai might have participated in “round-tripping” with the Indian social media company VerSe to artificially boost sales figures — a strategy that was instrumental in drawing in investors.
The firm is said to owe $85 million to Amazon and $30 million to Microsoft for unpaid cloud services. A federal investigation in the US is currently in progress, with authorities looking to obtain its financial records and client information.
Public admission and bankruptcy filing _
In a post on LinkedIn, Builder.ai acknowledged its failure: ‘Despite the hard work of our current team and trying every possible option, the business has not been able to recover from past challenges and decisions that put a lot of pressure on its financial situation.’
The company has started formal bankruptcy proceedings in the places where it operated, including India, the UK, and the US.
AI excitement vs. startup truth -:
Builder.ai’s failure has brought back worries about “AI washing” — which means calling regular tech services AI to take advantage of investors’ excitement.
Phil Brunkard from Info-Tech Research Group pointed out that a lot of startups grew quickly without strong technology or rules, riding a wave of hype that wasn’t checked.
Now that regulators are looking into how AI companies promote their products, the Builder.ai situation has become a warning sign.
What was advertised as an AI revolution turned out to be just a regular outsourcing company dressed up in fancy words. The outcome: workers lost their jobs, investors lost millions, and there are new calls for honesty and responsibility in the AI startup world.
Sources – Business Standard
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