Builder.ai, a London-based AI startup once valued at $1.5 billion and backed by major investors including Microsoft and Qatar’s sovereign wealth fund, has filed for bankruptcy following revelations of deceptive practices and financial misconduct.ft.com+2ft.com+2timesofindia.indiatimes.com+2
The Rise and Fall of Builder.ai
Founded in 2016, Builder.ai positioned itself as a leader in AI-powered app development, claiming to offer a platform that could build software up to six times faster and 70% cheaper than traditional methods. The company attracted significant investment, raising over $450 million from investors such as Microsoft, SoftBank, and the Qatar Investment Authority. At its peak, Builder.ai served clients like JP Morgan Chase and had a global presence with offices in the United States, UAE, Singapore, and France. tech.eu+2businesscloud.co.uk+2timesofindia.indiatimes.com+2ctol.digital+1techannouncer.com+1tech.eu+1thesaasnews.com+1
Allegations of Fraudulent Practices
The company’s downfall began with an internal investigation that uncovered potentially fraudulent sales practices. Reports revealed that Builder.ai had inflated its revenue figures by misreporting contract values, excluding discounts, and engaging in circular transactions with key partners like VerSe Innovation. These actions led to a significant restatement of the company’s financials, with actual revenues reported to be a fraction of what was previously claimed. timesofindia.indiatimes.com+2ft.com+2ft.com+2ft.com+1en.wikipedia.org+1
Further scrutiny revealed that Builder.ai’s AI capabilities were largely driven by a team of over 700 engineers based in India, rather than advanced artificial intelligence systems as the company had led investors and clients to believe. tribune.com.pk+3en.wikipedia.org+3timesofindia.indiatimes.com+3
Legal and Financial Consequences
In May 2025, Builder.ai filed for Chapter 7 bankruptcy in Delaware, listing debts to over 200 creditors and liabilities of up to $100 million against less than $10 million in assets. The company’s financial troubles were compounded by unpaid bills to firms such as Israeli private intelligence agency Shibumi Strategy, prominent U.S. law firm Quinn Emanuel, and crisis PR firm Sitrick Group. ft.com+1ft.com+1
Founder Sachin Dev Duggal, who stepped down as CEO in March 2025 but remained on the board as “chief wizard,” has been named as a suspect in a money laundering investigation related to the collapsed Indian company Videocon. Duggal denies any wrongdoing, but the legal challenges have further tarnished Builder.ai’s reputation. ft.com+8techannouncer.com+8businesscloud.co.uk+8ft.com
The Future of Builder.ai
As Builder.ai enters bankruptcy proceedings, the company’s remaining assets are being liquidated to pay off creditors. Duggal has reportedly expressed interest in buying back the company out of insolvency, but it remains to be seen whether this will be feasible given the company’s financial and legal troubles.ctol.digital+6ft.com+6en.wikipedia.org+6
The collapse of Builder.ai serves as a cautionary tale about the importance of transparency and due diligence in the tech industry. Despite its impressive claims and significant investment, the company’s reliance on deceptive practices and lack of genuine technological innovation led to its downfall.ft.com+1timesofindia.indiatimes.com+1timesofindia.indiatimes.com
As the tech world reflects on Builder.ai’s rise and fall, the case underscores the need for investors and clients to critically assess the claims of AI startups and to demand verifiable evidence of their capabilities.
