700 Engineers Pretend To Be AI

London-based Builder.ai, one of UK’s best-funded technology start-ups and once valued at $1.5 billion, backed by major investors including Microsoft, the Qatar Investment Authority, SoftBank’s DeepCore, and IFC, have declared bankruptcy and announced on LinkedIn that they would be "entering into insolvency proceedings". 

They were exposed in May this year for falsely marketing their app-building services as an AI-powered no-code platform that promises to make software creation "as easy as ordering pizza".  

Investigations revealed that the company’s much-touted AI assistant, “Natasha”, was largely a façade – most of the work was done manually by 700 engineers based in India. 

Additionally, Builder.ai, founded in 2016 by Sachin Dev Duggal (right), and previously known as Engineer.ai, engaged in financial misconduct through “round-tripping” with Indian social media firm, VerSe Innovation to inflate their revenue figures – a tactic that helped attract investment. 

Between 2021 and 2024, both companies had billed each other large amounts, even though no real services were provided. In fact, Builder.ai even claimed $220 million in 2024 sales, but their actual income was closer to $50 million. An independent audit exposed the discrepancy, prompting lender Viola Credit to seize $37 million from Builder.ai’s accounts. 

Left with only $5 million in restricted funds, the company’s operations across five countries – including India, the UK, and the US – came to a standstill. With regulatory issues freezing fresh capital, Builder.ai failed to pay staff, leading to nearly 1,000 layoffs. 

Also, the company reportedly owe $85 million to Amazon and $30 million to Microsoft in unpaid cloud services. A US federal probe is underway, with investigators seeking access to their financial and client data. 

Builder.ai’s downfall has reignited concerns around “AI washing” – branding basic tech services as AI to capitalise on investor excitement. Phil Brunkard of Info-Tech Research Group noted that many start-ups “scaled fast without robust technology or governance”, riding a wave of unchecked hype. 

With regulators now probing how AI firms market their products, the Builder.ai episode has become a cautionary tale. What was sold as an AI revolution turned out to be a conventional outsourcing firm cloaked in buzzwords. The result: employees out of work, millions in investor losses, and renewed demands for transparency and accountability in the AI start-up ecosystem.