The tech world is reeling from revelations that Builder.ai, once hailed as a $1.5 billion (£1.11 billion), 'AI' powerhouse, now faces scrutiny as its highly promoted artificial intelligence facade crumbles, revealing a human-powered operation behind the cutting-edge AI automation.
Builder.ai, the British no-code AI startup that once garnered acclaim for its strategic partnership with Microsoft and secured a $250 million (£184.64 million) investment led by the Qatar Investment Authority, declared Tuesday that it is initiating bankruptcy protection.
As reported by Bloomberg, the company's dramatic decline occurred after a key lender, Viola Credit, withdrew $37 million (£27.33 million) from its accounts, leaving a mere $5 million (£3.69 million) in restricted funds and effectively paralysing operations in five nations.
Earlier this year, CEO Manpreet Ratia took over from founder Sachin Dev Duggal in a boardroom shake-up designed to restore investor confidence. Ratia has since stated that most of the company's workforce has been laid off. As Bloomberg reports, Builder.ai will now commence bankruptcy filings in its operational territories, including the UK, US, UAE, Singapore, and India.
Builder.ai's $450 Million Funding: Big Names, Big Promises
Launched in 2016, Builder.ai presented itself as a groundbreaking platform, allowing businesses to create customised applications with minimal coding, leveraging artificial intelligence. As reported by Bloomberg, the company accumulated over $450 million (£332.36 million) in total funding, drawing in prominent investors such as Microsoft, the World Bank's IFC, Jeffrey Katzenberg's WndrCo, Lakestar, and SoftBank's DeepCore incubator.
Less than two months ago, Builder.ai admitted to revising down core sales numbers and engaging auditors to inspect its financials for the past two years. This came amidst concerns from former employees who suggested sales performance had been inflated during prior investor briefings.
'Bots' Revealed As Builders From India
Bloomberg notes that these allegations initiated a cascade of investor apprehension, internal changes, and an eventual erosion of confidence. Adding to the troubles, Linas Beliūnas, Director of the financial company Zero Hash, recently exposed that Builder.ai lacked true AI, instead utilising a group of Indian developers who were merely pretending to be bots writing code.
😃 The Natasha neural network turned out to be 700 Indian programmers
— Bernhard Engelbrecht (@BernhardEngel_) May 29, 2025
The startup BuilderAI offered to write any application, like in a constructor, by selecting the necessary functions.
In reality, customer requests were sent to the Indian office, where 700 Indians wrote code… pic.twitter.com/lYWipf63cp
'It turns out the company had no AI and instead was just a group of Indian developers pretending to write code as AI,' he wrote in a LinkedIn post. Beliūnas also highlights that Duggal reportedly presented false revenue figures to investors. Remarkably, the company managed to sustain this deception for eight years.
Investor Dreams Shattered By Reality
The critical moment arrived when Viola Credit, which had provided the company with a $50 million loan in 2023, took control of $37 million (£27.33 million) from its accounts. This action rendered Builder.ai incapable of fulfilling payroll commitments or maintaining essential operations.
Manpreet Ratia informed Bloomberg that the remaining funds, held in Indian accounts, are inaccessible due to regulatory restrictions.
The Broader Impact Of Builder.ai's Collapse
The insolvency proceedings at Builder.ai mirror a rising trend of instability within AI startups. Phil Brunkard, an executive counsellor at Info-Tech Research Group, shared with Computer World that many AI companies expanded rapidly, fueled by hype, frequently without robust financial oversight or genuinely unique products.
'The Qatar Investment Authority (QIA) is one of the biggest losers in this saga. They led a $250 million (£184.68 million) funding round two years ago,' Beliūnas adds.
Competition regulators are reportedly examining Builder.ai's marketing practices, with potential implications for how AI companies present their capabilities to investors and customers.
The scandal serves as a stark reminder that whilst artificial intelligence continues advancing rapidly, human expertise remains irreplaceable in many complex technical domains—a lesson that Builder.ai learned through public humiliation rather than honest business practices.
As the dust settles, the tech industry faces uncomfortable questions about transparency, accountability, and the ethical boundaries of AI marketing in an increasingly sceptical marketplace.
