Builder.ai claims to use AI to simplify software development, attracting huge investments from Microsoft, SoftBank and others, and its valuation once exceeded US$1.5 billion. But in fact, it actually relied on humans pretending to be AI, and the founder falsely reported three times the revenue. After the scandal was exposed, investments were frozen and the company went bankrupt.

 

Indian guys are really something!

 

The person we are going to talk about today is Sachin Dev Duggal, the founder and former CEO of the AI ​​programming company Builder.ai.

 

• He not only created a fake AI company that is “all humans, no AI”

 

• Obtained hundreds of millions of dollars in financing from giants such as SoftBank and Microsoft, with a valuation of 1.5 billion

 

• And he dared to falsely report 300% of his revenue to investors.

 

Yes, there is no AI in the backend of this company, there is just a group of Indian guys pretending to be AI to write code.

 

What’s even more exciting is that this deception lasted for 8 years.

 

But this week he was completely done.

 

 

With the exposure of the latest "fraud", the investors in the previous round were so frightened that they hurriedly froze the remaining US$37 million in their investment accounts (a total investment of US$50 million), leaving only US$5 million in the company account. This US$5 million is also restricted by the government's regulations on the exit of funds, and cannot be used to pay wages.

 

Builder.ai had no choice but to file for bankruptcy. At this time, the CEO had already been replaced by Manpreet Ratia, who came to "clean up the mess" - founder Sachin Dev Duggal resigned as CEO in February and was replaced by Ratia.

 

This farce directly led to the largest collapse among AI startups since the release of ChatGPT in 2022 - the company was valued at more than $1.5 billion in its last round of financing.

 

 

In addition to Viola Credit, which provided $50 million as mentioned above, another "big loser" in this storm is the Qatar Investment Authority (QIA), one of the world's largest sovereign wealth funds that led a $250 million financing two years ago.

 

And Microsoft also made an investment in the same year and became a strategic partner. They even integrated Builder.ai into cloud services.

 

Golden Age

 

Builder.ai was born in London out of founder Sachin Dev Duggal’s dissatisfaction with traditional software development.

 

In the golden age of AI-driven storytelling, Builder.ai has a slogan that’s too good to ignore: making software development “as easy as ordering pizza.”

 

The startup, founded in 2016, claims it can democratize software development by making it possible for non-engineers to build complex applications through a purportedly AI-powered platform.

 

AI slogans work wonders for investors.

 

Builder.ai, formerly known as Engineer.ai, the London- and Los Angeles-based company raised $29.5 million in 2018 from investors including Deepcore Inc., a wholly-owned subsidiary of SoftBank.

 

Other investors include Zurich-based venture capital firm Lakestar, an early investor in Facebook Inc. and Airbnb Inc., and Singapore-based Jungle Ventures.

 

 

By 2022, Builder.ai had raised $195 million, and in May 2023, it added another $250 million in a funding round led by the Qatar Investment Authority (QIA).

 

In the same year, Microsoft joined as a strategic investor and partner to integrate Builder.ai platform into its cloud service offerings.

 

 

 

The recognition that this brings is huge, and the expectations that come with it are equally huge.

 

Over the next eight years, it raised more than $445 million in funding, with investors including Microsoft and the Qatar Investment Authority, and the company's valuation crossed the $1.3 billion mark.

 

Builder.ai's solution is to combine modular code components with human developers, coordinated by AI.

 

Its platform, called "Builder Studio," comes with a digital assistant named "Natasha" that promises a seamless user experience powered by AI.

 

 

But behind this vision is actually this: Most of the work is done by developers in India, not AI.

 

In 2019, the Wall Street Journal revealed an embarrassing truth: Builder.ai’s AI was more of a marketing gimmick than an engineering breakthrough.

 

 

Several current and former employees said some pricing and schedule calculations are done by legacy software, and much of the rest is done manually by employees.

 

"If you tell a customer you're using AI, they probably won't think of technology from the 1950s. Decision trees are a very old and simple technology."

 

These people said the company lacked natural language processing technology and that the decision trees used internally by the company should not be considered AI.

 

As the report stated, Builder.ai, the so-called AI company, is "all manual labor, no intelligence".

 

This gap between narrative and reality will determine the company's trajectory.

 

Only manual labor, no intelligence.

 

Signs of Builder.ai’s deception weren’t limited to a 2019 Wall Street Journal report.

 

According to multiple former employees and insiders on Reddit, Builder.ai may have only manual labor from the beginning, without intelligence.

 

Multiple former employees said there was no way management was unaware of the fraud going on and simply turned a blind eye. This company has been working for two years and almost no projects have been delivered.

 

 

Moreover, a former employee revealed that Builder.ai has extremely low employee wages, even saying that "the salary given is too rubbish" and that it is not an AI-oriented company, but a marketing-oriented company.

 

 

 

A year ago, a user found that he found many "incomprehensible" things when using Builder.ai's services.

 

 

These include: extremely poor development experience, missing modules, unusable code, inability to access the IDE, and even some codes that cannot be modified at all.

 

 

Some people familiar with the matter directly revealed that Builder.ai is actually a company that uses "ai domain names" to defraud. The company employs a large number of low-cost developers to "pretend to be AI."

 

 

The Hour of Reckoning

 

Over time, the rifts within Builder.ai have widened.

 

According to insiders, the company has long relied on inflated revenue forecasts and AI hype to obtain financing.

 

A large global workforce and costly expansion plans, including opening new markets in Southeast Asia and the Middle East, have kept the burn rate rising.

 

 

At the same time, the former CEO's legal problems are also emerging one after another.

 

According to the Financial Times, Duggal is involved in a criminal money laundering investigation in India. In response, Builder.ai's general counsel responded in a now-deleted blog that Duggal was only a witness in the case.

 

However, Duggal resigned as CEO in February but remained on the board of directors and retained his "wizard" title.

 

He was replaced by Manpreet Ratia, a former executive at Amazon and Flipkart, who previously served as the managing partner of Jungle Ventures, an investor in Builder.ai.

 

 

Then came the moment of reckoning.

 

In May 2025, Viola Credit, one of Builder.ai's senior investors, withheld $37 million from the company's accounts and triggered a default.

 

Chief Executive Manpreet Ratia, who took over just two months ago to clean up the mess, has just $5 million in cash on hand.

 

Days later, he filed for bankruptcy.

 

It turns out that Builder.ai provided lenders with inflated financial forecasts and misrepresented the health of its revenue.

 

This violation of the terms of the contract allowed Viola Credit to take drastic measures.

 

But the bigger reason behind this structural collapse is that their business model never matched their branding.

 

 

Ratia admitted in a company-wide conference call that the game was doomed. Most of the global workforce has been laid off, and products once positioned as flagship AI innovations have been shelved.

 

On May 20th, it officially declared bankruptcy.

 

The failure came a month after the company underwent a last-minute reorganization, laying off 220 of its 770 employees.

 

Builder.ai said this week that it would appoint an administrator to oversee the bankruptcy proceedings due to "an inability to recover from historical challenges and past decisions that have placed significant pressure on the company's financial position" despite management's "relentless efforts."

 

According to the Financial Times, Builder.ai owes Amazon a total of $85 million and Microsoft $30 million.

 

Entrepreneurial Star

 

Why did Duggal win the favor of investors in the first place? Whether it is Qatar Funds, SoftBank or Microsoft, they are not easily deceived.

 

This has to mention Duggal’s “glorious” resume.

 

Sachin Dev Duggal started his career at the age of 14 by building PC computers, and by the age of 17 he had created one of the world's first automated currency arbitrage trading systems for Deutsche Bank.

 

At the age of 21, while still studying at Imperial College, he launched his next entrepreneurial project - cloud computing company Nivio.

 

 

After leaving Nivio, which was valued at $100 million, Duggal began focusing on building a photo-sharing app called Shoto.

 

However, he had trouble finding a front-end developer that fit his needs. Duggal couldn't help but wonder: If he couldn't find reliable help, how could someone without an engineering background start building an app?

 

So he founded Builder.ai, which aims to make software building "as easy as ordering pizza."

 

Everyone knows the story behind it.

 

AI washing

 

In the industry, Builder.ai’s model of packaging traditional technical services as AI to defraud funds is called “AI washing”.

 

Its failure has also reignited discussions about the need for technical due diligence in AI transactions.

 

For customers, many of them startups and small and medium-sized businesses, the sudden outage left them scrambling to rebuild or migrate their applications. This highlights the risks of relying on emerging players to provide mission-critical software infrastructure.

 

Despite this blow, the broader low-code/no-code market remains resilient.

 

Gartner predicts that by 2028, 60% of new enterprise applications will be developed using such platforms. The global market size is expected to reach US$26 billion by the end of this year.

 

From Gartner accolades to Fast Company rankings, from star investors to a top company logo displayed on its website, Builder.ai appears to be one of the great success stories of the AI ​​era.

 

But like many companies built on hype, it confused scale with sustainability, and visibility with viability.

 

Ultimately, the story of Builder.ai is less about a failed technology and more about the consequences of pretending it ever worked.

 

In the investment boom driven by ChatGPT, scale, valuation and exposure are not equal to a moat.

 

The story of Builder.ai is very similar to that of Theranos in the past - when there is a 1mm gap between technological promises and actual capabilities, the capital market will tear open an abyss of 1km in the next second.