Once valued at $1.5 billion and backed by Microsoft and QIA, Builder.ai faces bankruptcy and probes over allegedly inflated financials and exaggerated AI capabilities, exposing risks in rapid tech investment.
Once celebrated as a beacon of innovation in the artificial intelligence sector, British tech startup Builder.ai has sunk into bankruptcy, a fall from grace that underscores the frailty of even the most seemingly robust ventures in the fast-paced tech landscape. Valued at $1.5 billion not long ago and buoyed by substantial investments from industry giants like Microsoft and the Qatar Investment Authority (QIA), the company is currently under investigation by UK and US authorities for allegedly inflating its financial statements and misrepresenting its technological capabilities.
The trajectory of Builder.ai shifted dramatically when creditor Viola Credit, which extended a $50 million loan to the startup in 2023, seized $37 million from its accounts due to what is reported to be a breach of loan terms. This action left the company with a mere $5 million, trapped in Indian accounts due to restrictive currency transfer regulations, as explained by the company’s CEO, Manpreet Ratia. In the wake of these developments, Ratia disclosed in a recent interview that a majority of the workforce has been laid off, marking a severe contraction for the once-promising startup.
Builder.ai claimed to have transformed the software development process, proposing a platform that creates custom applications in “days or weeks” using AI, thus attracting significant interest and capital. The company managed to successfully raise $250 million in a Series D funding round in 2022 and received additional support from Microsoft in 2023. However, a Bloomberg investigation has cast doubt on these claims, revealing that the company, in fact, employed over 700 human engineers from VerSe Innovation, a firm predominantly recognised for its social media app Dailyhunt, to build applications. Internal documents indicated that many custom apps were generated using pre-existing templates and required substantial manual intervention, contradicting the startup’s narrative of an AI-driven approach.
Compounding these issues are serious allegations of “round-tripping” between Builder.ai and VerSe. From 2021 to 2024, the two companies reportedly exchanged nearly identical amounts, creating an illusion of commercial activity and artificially inflating revenue numbers that were later presented to investors. It is estimated that Builder.ai claimed around $60 million in revenue from VerSe, with reciprocal payments occurring for purported marketing services that lacked genuine transactions.
Umang Bedi, co-founder of VerSe, has refuted these allegations, dubbing them “absolutely baseless and false” and asserting that his company does not partake in revenue inflation. Nevertheless, Builder.ai’s own recent admissions have raised eyebrows; it acknowledged revising its revenue forecasts for 2024 downwards by a staggering 300%, a shift that necessitated hiring auditors to scrutinise two years’ worth of financial records. This followed inquiries from Bloomberg prompted by concerns voiced by former employees regarding the company’s transparency.
The scepticism surrounding Builder.ai’s technological promises is hardly a recent phenomenon. Reports as far back as 2019 from the Wall Street Journal highlighted doubts, citing former staff who described the operations as “all engineer, no AI.” Despite these red flags, Builder.ai continued to attract significant backing, maintaining an image as a revolutionary AI player until the integrity of its financial foundation came into question.
As the story unfolds, Builder.ai’s collapse serves as a stark reminder of the necessity for due diligence in the rapidly evolving landscape of AI investment and the imperative for accountability among venture-backed firms making ambitious claims. Its meteoric ascent and precipitous decline highlight the precarious nature of tech startups wrapped in the allure of innovation, promising disruption whilst navigating the treacherous waters of financial integrity.
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Source: Noah Wire Services
- https://slguardian.org/ai-startup-collapses-amid-allegations-of-revenue-fraud-and-fake-tech-claims/ – Please view link – unable to able to access data
- https://www.ft.com/content/926f4969-fda7-4e78-b106-4888c8704bda – Builder.ai, a UK-based tech startup backed by Microsoft and the Qatar Investment Authority (QIA), is facing insolvency proceedings after an internal investigation uncovered potentially fraudulent sales and overstated revenues. Provisional accounts revealed that 2024 revenues were revised down from $220 million to $55 million, and 2023 revenues dropped from $180 million to $45 million. The company’s lenders declared a default after these revisions, prompting insolvency proceedings. Founder Sachin Dev Duggal and Chief Revenue Officer Varghese Cherian had already stepped down earlier, though Duggal retained a board seat.
- https://www.ft.com/content/11afc46c-b435-489d-a9f1-134ad0c00d25 – Builder.ai, a UK-based tech startup, has been making waves with its use of artificial intelligence in app development, securing significant investments from major firms like Microsoft and the Qatar Investment Authority. Founded by Sachin Dev Duggal, the company was recently valued at over $1 billion. However, Duggal’s career has been marred by legal disputes and challenges, including charges from Indian authorities related to past business dealings and other allegations of financial misconduct during his time at Nivio, a prior venture. Despite these issues, Builder.ai has continued to attract investment and partners by positioning itself as a leader in AI-driven software development. The company’s success is tempered by internal criticisms, such as high staff turnover and disputes over its service quality. Moving forward, Duggal and Builder.ai aim to convert their innovative promise into tangible and reliable business solutions amidst their ongoing legal and operational challenges.
- https://www.ft.com/content/f7b5c14f-bdb0-4ce2-8353-44710ac4536d – Builder.ai, a Microsoft-backed app-creating tech start-up, has revealed it had to restate its 2023 revenues to $140 million due to issues with resellers in the Middle East not meeting their promises. The company also lowered its forecasted revenue for the second half of 2024 by 25%. New CEO Manpreet Ratia acknowledged past problems under the leadership of founder Sachin Dev Duggal, who stepped down but retains a role on the board. Ratia appointed BDO for the company’s first group-level audit for 2023-2027, following scrutiny over previously unverified accounts. Despite reducing its global workforce by 270 people, Ratia remains optimistic about the company’s future, focusing on restructuring and enhancing successful ventures.
- https://www.ft.com/content/f41297ee-0bd8-4c9b-8b5b-04b15e30951f – As Donald Trump returns to office, his administration and allies are making aggressive pushes into the cryptocurrency space, with key figures attending a major Bitcoin conference in Las Vegas. Trump Media & Technology Group announced plans to raise billions to invest in cryptocurrencies, signaling strong governmental endorsement of digital assets. Additional crypto-related deals include a $1.5 billion fund targeting undervalued biotech firms for conversion into crypto holdings. Meanwhile, AI startup Builder.ai has collapsed amid a suspected revenue inflation scandal, jeopardizing over $500 million in investments from major firms like Microsoft and SoftBank. Founder Sachin Dev Duggal, once celebrated, now faces legal scrutiny but is reportedly exploring a buyback plan. Simultaneously, the litigation finance sector faces backlash from insurers over rising legal payouts, spurring a public dispute between Burford Capital and insurance giant Chubb. Despite insurer concerns, tailored financial products around litigation funding remain lucrative. Separately, Citadel Securities reported a 70% profit increase to $1.7 billion, driven by market volatility. In other corporate movements, McKinsey has cut over 10% of its workforce, and private equity firms TPG and Blackstone are attempting a $16 billion buyout of Hologic. Notable job shifts include Li Zhenguo stepping back from Longi and new hires at JPMorgan Chase and Mayer Brown.
- https://www.bloomberg.com/news/articles/2025-03-31/microsoft-qia-backed-startup-builder-ai-hires-auditors-to-probe-inflated-sales – Builder.ai, a London-based artificial intelligence startup backed by Microsoft Corp. and the Qatar Investment Authority, has lowered the sales figures it provided to investors and hired auditors to examine its last two years of accounts. The company, which has raised more than $450 million, dropped its revenue estimates for the second half of 2024 by about 25% after some sales channels ‘did not come through,’ according to Manpreet Ratia, the recently appointed chief executive.
- https://www.wamda.com/en/2023/05/qia-leads-builderai-250-million-series-d-round – Qatar Investment Authority (QIA) has led the $250 million Series D funding raised by Builder.ai, along with Iconiq Capital, Jungle Ventures and Insight Partners. Founded in 2016 by Sachin Dev Duggal and Saurabh Dhoot, Builder.ai is an AI-powered composable software platform that allows users to build an app (web or mobile) at affordable prices. QIA is the sovereign wealth fund of Qatar. It was founded in 2005 to invest and manage the state reserve funds. QIA’s funding will fuel Builder.ai’s innovation pipeline allowing further investments in talent, partnerships, and technology.
Noah Fact Check Pro
The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.
Freshness check
Score:
8
Notes:
The narrative presents recent developments regarding Builder.ai’s financial mismanagement and insolvency proceedings. The earliest known publication date of similar content is from 2 weeks ago, as reported by the Financial Times on May 21, 2025. ([ft.com](https://www.ft.com/content/9fdb4e2b-93ea-436d-92e5-fa76ee786caa?utm_source=openai)) The report includes updated data and references to recent events, indicating a high freshness score. However, the presence of similar reports across multiple reputable outlets suggests that the content is not entirely original. Additionally, the narrative includes references to other articles, which may indicate a reliance on existing sources. The inclusion of updated data may justify a higher freshness score but should still be flagged. ([ft.com](https://www.ft.com/content/926f4969-fda7-4e78-b106-4888c8704bda?utm_source=openai))
Quotes check
Score:
7
Notes:
The narrative includes direct quotes attributed to Builder.ai’s CEO, Manpreet Ratia, regarding the company’s financial adjustments and audit initiation. A search reveals that these quotes were first reported by Bloomberg on March 31, 2025. ([bloomberg.com](https://www.bloomberg.com/news/articles/2025-03-31/microsoft-qia-backed-startup-builder-ai-hires-auditors-to-probe-inflated-sales?utm_source=openai)) The identical wording of these quotes in the narrative suggests potential reuse of content. However, no earlier matches were found, indicating that the quotes may be original or exclusive to the narrative.
Source reliability
Score:
6
Notes:
The narrative originates from the ‘SL Guardian,’ a source that is not widely recognized or verifiable. This raises concerns about the credibility and reliability of the information presented. The lack of a public presence or legitimate website for the ‘SL Guardian’ further compounds these concerns. Therefore, the source’s reliability is questionable.
Plausability check
Score:
9
Notes:
The narrative aligns with recent reports from reputable outlets, such as the Financial Times and Bloomberg, regarding Builder.ai’s financial mismanagement and insolvency proceedings. ([ft.com](https://www.ft.com/content/9fdb4e2b-93ea-436d-92e5-fa76ee786caa?utm_source=openai), [bloomberg.com](https://www.bloomberg.com/news/articles/2025-03-31/microsoft-qia-backed-startup-builder-ai-hires-auditors-to-probe-inflated-sales?utm_source=openai)) The claims about revenue inflation and audit initiation are consistent with these reports, suggesting a high level of plausibility. However, the lack of supporting detail from other reputable outlets and the questionable reliability of the source warrant caution.
Overall assessment
Verdict (FAIL, OPEN, PASS): FAIL
Confidence (LOW, MEDIUM, HIGH): MEDIUM
Summary:
The narrative presents recent developments regarding Builder.ai’s financial mismanagement and insolvency proceedings, with references to updated data and direct quotes from CEO Manpreet Ratia. However, the content appears to be recycled from existing reports, and the source’s reliability is questionable due to its lack of verifiability and public presence. While the claims are plausible and align with reports from reputable outlets, the overall credibility of the narrative is compromised by the questionable source and potential reuse of content.
