This article is adapted from Rest of World’s recent feature: Inside the collapse of Builder.ai
What did Builder.ai actually do?
Builder.ai was founded in 2016 by Sachin Dev Duggal, a British-Indian entrepreneur. Based in London — with operations in Los Angeles, New Delhi, Dubai, Tokyo, and Singapore — Builder.ai became one of the world’s hottest startups by promising to use AI to radically ease the slow and difficult process of building apps and websites. Investors including Microsoft and the Qatar Investment Authority eventually poured as much as $445 million into the company. It was ultimately valued at $1.5 billion, with over 500 employees.
Builder.ai had two signature pieces of tech. The first was pre-coded blocks of reusable features — such as user logins, payment platform integrations, and contact pages — in the form of a library that would make software development something like putting together a Lego set. Second was a proprietary AI tool the company advertised as revolutionary, able to drastically reduce human labor and compress “weeks of work into hours and minutes.”
Customers interacted with an AI chatbot named Natasha, which the company said would build the first 80% of a product, before human engineers provided the finishing touches. “The end goal — as the founder Sachin said — was to make it as easy as ordering a pizza,” one former employee told Rest of World. “You talk to Natasha online, you tell her what you need, and then we build, refine, and use Natasha to build and refine.”
From a Microsoft-backed startup to bankruptcy
The reality of Builder.ai’s operations differed greatly from the sleek and speedy AI experience it promised, according to recent interviews with ex-employees, past reporting by The Wall Street Journal, and a lawsuit filed by the company’s one-time chief business officer. For our recent feature, Rest of World spoke to a dozen former Builder.ai employees from India, the U.S., and the U.K., to get an inside account of the company’s operations. Although Builder.ai did use AI for relatively basic tasks, former employees said, it relied on staff and outsourced developers in countries including India and Ukraine to do the vast majority of its work.
One issue Builder.ai faced is that, with humans handling the bulk of development work, delivery timelines were often longer than many clients expected. Two former employees said customers were often frustrated, and some prospective clients walked away after hearing how long their projects would take to complete. Other customers canceled projects or refused to pay because of delays and missed benchmarks. As early as 2019, there were reports that Builder.ai was exaggerating its use of AI. Some analysts are citing Builder.ai as a potential case of “AI washing,” in which companies falsely promote products or services as AI to attract attention and funding.
Why did Builder.ai collapse?
In March, Bloomberg reported the company had inflated revenues. Soon after, Israeli lending firm Viola Credit seized most of Builder.ai’s cash. Another Bloomberg report in May alleged Builder.ai and an Indian content company called VerSe had faked income by billing each other for services in a practice known as “roundtripping.” (VerSe told the publication the allegations were “absolutely baseless and false.”) Lawyers representing Builder.ai, a spokesperson for the company, and Manpreet Ratia, its former CEO, did not respond to comment requests from Rest of World.
By March 2025, the company was in damage control. They cut 270 employees and installed Ratia as CEO. “The new CEO was giving his level best to fix things, but I believe the damage was done,” said a former project manager. On May 20, Ratia made an announcement to its hundreds of remaining employees: Builder.ai had run out of money. The company was filing for bankruptcy, and they were all being let go.
“Builder.ai built a real AI-powered platform — combining LLM models and our own orchestration layers — to automate meaningful parts of the software assembly process,” Ratia later wrote on LinkedIn. “It wasn’t a gimmick. It wasn’t smoke and mirrors.”
In retrospect, one former employee told Rest of World that he believes Builder.ai was a good idea, but that the company failed to run its business well. Another former employee was more blunt: “They were never transparent about the company’s financials. They raised over $445 million. … Where did all the money go?”
Great Job Rest of World & the Team @ Rest of World – Source link for sharing this story.
