In the world of tech startups, few stories have been as dramatic and cautionary as that of Builder.ai. Once hailed as a potential game-changer in software development, the company promised to make custom app creation as easy as ordering pizza. Backed by heavyweights like Microsoft and Qatar’s sovereign wealth fund, and boasting a valuation of $1.5 billion at its peak, Builder.ai rode a wave of hype built around artificial intelligence, automation, and the future of no-code development. But behind the flashy branding and investor confidence was a very different story—one of manual labor dressed up as machine learning, exaggerated financial claims, and a business model that couldn’t support its promises.
This week, Builder.ai filed for insolvency, confirming months of speculation about its financial health and internal troubles. For many, the collapse did not come as a surprise. What had been touted as a revolutionary AI-based platform was, in large part, powered by engineers working manually behind the scenes, hidden from clients and investors alike. With mounting debt, dwindling cash reserves, and investigations by regulatory authorities, Builder.ai has become a case study in what can happen when technology promises go unchecked and investor due diligence is compromised.
Builder.ai, originally launched as Engineer.ai in 2016 by Sachin Dev Duggal and Saurabh Dhoot, was founded in London with a simple idea—to make software development accessible to people with no coding background. Its platform aimed to simplify app building through a guided process, claiming users only needed an idea while the AI would do the rest. This promise, though ambitious, struck a chord with a growing market of small businesses, entrepreneurs, and even large organizations seeking faster and cheaper ways to build software.
By June 2018, the company launched its platform, complete with a virtual assistant named “Natasha,” which was marketed as an AI helper that could assist clients in scoping and building apps. In reality, however, Natasha functioned more like a chatbot interface, and most of the development work continued to be done manually. Despite this, the company claimed early traction with clients such as BBC and Virgin, boasting $24 million in revenue within six months of launch.
Investor interest soon followed. Builder.ai raised $29.5 million in a Series A round in late 2018, led by Lakestar and Jungle Ventures. Marketing heavily leaned into the AI narrative, even as questions began to surface about the true capabilities of the platform. Reports from 2019 started to chip away at the company’s claims. Investigations revealed that Builder.ai was far more dependent on human labor than it let on. Engineers based in India were doing much of the development work, while the company continued to present itself as an AI-first operation. There were also allegations that it had posted fake reviews and used logos of companies it hadn’t actually worked with.
Despite these warnings, Builder.ai continued to secure funding. A Series B round in 2021 brought in another $65 million. Around this time, the company rebranded from Engineer.ai to Builder.ai and expanded its offerings to include Builder Cloud and Studio Store. Its headcount grew to over 500 employees, with operations across London, Los Angeles, and Delhi. The platform was widely promoted as a low-code/no-code solution powered by artificial intelligence, although many developers familiar with the system knew that it relied heavily on traditional development methods behind the scenes.
In March 2022, Builder.ai announced a $100 million Series C round led by Insight Partners. The company claimed it was growing rapidly, with 300% year-over-year revenue increases. Internally, however, concerns persisted about whether the technology had truly caught up with the branding. By May 2023, the company had secured its largest funding round yet—$250 million in Series D funding. The round was led by Qatar Investment Authority, and Microsoft made a strategic investment as well, planning to integrate Builder.ai’s tools with Azure. With this, the company’s valuation soared to between $1.3 and $1.5 billion.
But the numbers didn’t add up. By late 2024, Builder.ai had taken on $50 million in debt financing after projecting revenues of $220 million for the year. These projections turned out to be grossly exaggerated. Real revenue was a fraction of the forecast, and by early 2025, the company’s cash reserves had dwindled to just $7 million. Financial irregularities began to surface, leading to the restatement of two years’ worth of financial results. The pressure intensified when auditors raised red flags about the company’s books and business practices.
In February 2025, CEO Sachin Dev Duggal stepped down, and Jungle Ventures’ Manpreet Singh Ratia was brought in to lead a turnaround effort. The board was trimmed down, and an emergency $75 million cash infusion was arranged to keep the company afloat. New partnerships were announced to refocus the business toward enterprise security and compliance. Still, the damage had already been done.
A bombshell report in April 2025 accelerated the company’s downward spiral. Bloomberg revealed that Builder.ai had engaged in a revenue-inflating scheme involving Indian tech firm VerSe Innovation. Between 2021 and 2024, the two companies allegedly exchanged fake invoices worth millions for services that were never delivered. This accounting trick may have artificially inflated Builder.ai’s revenues by as much as 300 percent. Internal documents and interviews with former employees exposed the extent of the deception. Engineers based in India were ordered to maintain the illusion of AI-generated code by mimicking outputs from the “Natasha” assistant. They were told to avoid revealing their location or using Indian English in communications to uphold the illusion.
Slack messages and memos obtained during the investigation showed senior executives instructing staff to obscure the role of human labor in the development process. One internal memo from 2022 plainly stated that investor-facing material must “focus on our proprietary AI—human labor isn’t part of the story.”
The financial fallout was swift. Creditors moved in quickly. Viola Credit seized $37 million from Builder.ai’s remaining accounts after confirming the revenue inflation. Microsoft, which had invested nearly half a billion dollars, suspended its partnership after internal reviews confirmed discrepancies. Amazon and Microsoft were among the company’s largest creditors, owed $85 million and $30 million respectively for cloud services. By May 2025, the company had no choice but to file for insolvency. Staff were informed that bankruptcy proceedings would begin, and remaining funds would be used to settle immediate creditor demands.
The United States Attorney’s Office for the Southern District of New York has launched a criminal probe into possible securities fraud, while the Securities and Exchange Commission is investigating whether Builder.ai misrepresented its technology to investors. The legal consequences may stretch for years, with potential lawsuits from former clients, investors, and regulators looming over the now-defunct company.
Builder.ai’s fall is not just a cautionary tale about overpromising and underdelivering. It highlights broader issues within the tech funding environment, where companies often secure large sums based more on marketing narratives than operational proof. In a market increasingly flooded with startups touting artificial intelligence, machine learning, and automation, Builder.ai’s collapse has made both investors and customers more skeptical.
For the low-code and no-code development sector, the collapse has prompted a re-evaluation. Many businesses that relied on Builder.ai’s tools now find themselves stranded, scrambling to migrate applications or rebuild software from scratch. Meanwhile, platforms like OutSystems, Mendix, Microsoft Power Apps, Bubble, and FlutterFlow are gaining renewed attention, especially those with transparent practices and long-term backing.
Yet the broader no-code/low-code market continues to grow. Industry analysts still expect the sector to exceed $26 billion by the end of 2025, with enterprise adoption predicted to increase steadily over the next few years. But the era of blindly backing startups based on AI buzzwords may be over.
