1.5 Billion Dollar AI Unicorn Collapses, All Fake Indian Programmers
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1.5 Billion Dollar AI Unicorn Collapses, All Fake Indian Programmers
Microsoft and Amazon were badly duped.
Navigating Web3 tides with focused insightsThe Indian guys are really something!
Today's story is about Sachin Dev Duggal, founder and former CEO of the AI coding company Builder.ai.
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He created a fake AI company that was "all human, no intelligence"
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Raised hundreds of millions in funding from giants like SoftBank and Microsoft, reaching a $1.5 billion valuation
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Dared to inflate revenue figures by 300% when reporting to investors
Yes, there was no AI in this company's backend—just a group of Indian developers pretending to be AI writing code.
Even more shocking? This scam lasted for eight solid years.
But this week, he’s finally finished.
Founder and former CEO Sachin Dev Duggal
Following the recent exposure of yet another fraud, the latest investor froze the remaining $37 million (out of a total $50 million investment) in the investment account, leaving only $5 million in the company’s account—and even that $5 million is restricted by government regulations on overseas fund transfers, making it unusable for payroll.
With no choice, Builder.ai had to file for bankruptcy. The CEO at the time was already Manpreet Ratia, brought in specifically to clean up the mess—founder Sachin Dev Duggal stepped down as CEO in February, with Ratia taking over.
This farce has directly triggered the largest collapse among AI startups since ChatGPT’s launch in 2022—the company was valued at over $1.5 billion in its last funding round.
Builder.ai's bankruptcy notice
Builder.ai's official website is no longer accessible, leaving only two contact emails
Besides Viola Credit, which provided $50 million, other major victims include Qatar Investment Authority (QIA), one of the world’s largest sovereign wealth funds, which led a $250 million funding round two years ago.
And Microsoft, which also invested around the same time and became a strategic partner—going so far as integrating Builder.ai into its cloud services.
Golden Age
Builder.ai was born in London, emerging from founder Sachin Dev Duggal’s frustration with traditional software development.
During the golden age of AI-driven narratives, Builder.ai had a compelling slogan that was impossible to ignore: make software development “as easy as ordering pizza.”
Founded in 2016, the startup claimed it could democratize software development by enabling non-engineers to build complex applications through a platform allegedly powered by AI.
The AI narrative worked wonders with investors.
Builder.ai was originally called Engineer.ai. In 2018, the London- and Los Angeles-based company raised $29.5 million from investors including Deepcore Inc., a wholly-owned subsidiary of SoftBank.
Other investors included Zurich-based venture firm Lakestar (an early backer of Facebook Inc. and Airbnb Inc.) and Singapore-based Jungle Ventures.
Founder Sachin Dev Duggal at an early tech conference
By 2022, Builder.ai had raised $195 million, and in May 2023 secured another $250 million in a funding round led by Qatar Investment Authority (QIA).
Later that year, Microsoft joined as a strategic investor and partner, integrating Builder.ai’s platform into its cloud service offerings.
This brought immense credibility—and equally high expectations.
Over the next eight years, it raised over $445 million from investors including Microsoft and QIA, crossing a $1.3 billion valuation.
Builder.ai’s proposed solution: combining modular code components with human developers, coordinated by AI.
Its platform, “Builder Studio,” featured a digital assistant named “Natasha,” promising a seamless, AI-driven user experience.
Builder.ai’s sleek website—now completely inaccessible
But behind this vision lay a reality: most work was done by developers in India, not AI.
In 2019, the Wall Street Journal exposed an embarrassing truth: Builder.ai’s AI was more marketing hype than engineering breakthrough.
Multiple current and former employees said pricing and timelines were calculated using conventional software, while the rest of the work was largely manual.
If you tell customers you're using AI, they probably aren’t thinking of 1950s technology. Decision trees are very old and simple techniques.
These individuals said the company lacked natural language processing capabilities, and the decision trees used internally shouldn’t be considered AI.
As reported, this AI company was “all human, no intelligence.”
This gap between narrative and reality would define the company’s trajectory.
All Human, No Intelligence
Signs of Builder.ai’s deception didn’t start with the 2019 Wall Street Journal report.
According to multiple former employees and insiders on Reddit, Builder.ai may have always been “all human, no intelligence” from day one.
Several ex-employees said management couldn’t have missed the ongoing fraud—they simply looked the other way. After working there for two years, one said they hardly saw any projects delivered.
Former employees also revealed that Builder.ai kept salaries extremely low, calling them “trash-tier,” and described the company as marketing-driven rather than AI-focused.
One user noticed many “inexplicable” issues while using Builder.ai’s service as early as a year ago.
These included: terrible development experience, missing modules, unusable code, inability to access IDEs, and some code being completely uneditable.
Insiders also stated outright that Builder.ai was essentially a company using an “ai domain” to defraud—hiring large numbers of low-cost developers to “pretend to be AI.”
Reckoning
Over time, cracks within Builder.ai continued to widen.
Insiders say the company long relied on inflated revenue forecasts and AI claims to secure funding.
Its massive global workforce and costly expansion plans—including entering new markets in Southeast Asia and the Middle East—drove up cash burn.
Meanwhile, the former CEO faced mounting legal troubles.
According to the Financial Times, Duggal was caught up in a money laundering criminal investigation in India. In response, Builder.ai’s general counsel once wrote in a now-deleted blog post that Duggal was merely a witness in the case.
Still, Duggal stepped down as CEO in February, though he remained on the board and kept his “wizard” title.
He was replaced by Manpreet Ratia, a former executive at Amazon and Flipkart, who previously served as managing partner at Jungle Ventures, one of Builder.ai’s investors.
Then came the reckoning.
In May 2025, Viola Credit, one of Builder.ai’s key investors, seized $37 million from the company’s account, triggering a default.
CEO Manpreet Ratia, who had taken over just two months earlier to fix things, was left with only $5 million in cash.
A few days later, he filed for bankruptcy.
It turned out Builder.ai had submitted inflated financial projections and lied about its revenue health to lenders.
This breach of contract terms allowed Viola Credit to take decisive action.
But the deeper cause of this structural collapse was that their business model never matched their branding.
Ratia admitted defeat during an all-hands call. Most global staff were laid off, and the product once positioned as an AI innovation flagship was shelved.
On May 20, the company officially declared bankruptcy.
A month before its failure, the company conducted a last-minute restructuring, cutting 220 of its 770 employees.
This week, Builder.ai said it would appoint an administrator to oversee bankruptcy proceedings due to “being unable to recover from historical challenges and past decisions that have placed significant pressure on the company’s financial position,” despite “relentless efforts” by management.
According to the Financial Times, Builder.ai owes Amazon $85 million and Microsoft $30 million.
Startup Star
Why was Duggal able to win investor trust in the first place? Whether it’s Qatari capital, SoftBank, or Microsoft, none are easy marks.
That brings us to Duggal’s “impressive” resume.
Sachin Dev Duggal started his career at age 14 building PCs. By 17, he created one of the world’s first automated currency arbitrage trading systems for Deutsche Bank.
While still studying at Imperial College London at age 21, he launched his next venture—a cloud computing company called Nivio.
After leaving Nivio, which was valued at $100 million, Duggal focused on building Shoto, a photo-sharing app.
However, he struggled to find frontend developers who met his needs. Duggal wondered: if even he had trouble finding reliable help, how could someone without an engineering background possibly build an app?
So he founded Builder.ai, aiming to make software development “as easy as ordering pizza.”
The rest, as they say, is history.
AI Washing
In the industry, Builder.ai’s practice of packaging traditional tech services as AI to raise funds is known as “AI washing.”
Its failure has reignited debate about the need for technical due diligence in AI deals.
For customers—many of whom were startups and small businesses—this sudden shutdown forced frantic rebuilding or migration of their applications. It highlights the risks of relying on emerging players for 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 built on such platforms. The global market is expected to reach $26 billion by year-end.
From Gartner accolades to Fast Company rankings, from star investors to top-tier client logos displayed on its website, Builder.ai seemed like one of the great success stories of the AI era.
But like many companies built on hype, it confused scale with sustainability, and fame with viability.
Ultimately, Builder.ai’s story is less about failed technology and more about the consequences of pretending it ever worked.
In the investment frenzy fueled by ChatGPT, scale, valuation, and visibility do not equal a moat.
Builder.ai’s story closely resembles Theranos—when the gap between technological promise and actual capability is just one millimeter, financial markets will rip open a kilometer-wide chasm the next second.
References:
https://www.ft.com/content/926f4969-fda7-4e78-b106-4888c8704bda
https://www.financialexpress.com/business/start-ups/why-did-microsoft-backed-1-3bn-builderai-collapse-accused-of-using-indian-codersforaiwork/3854944/
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