Inside the collapse of Builder.ai: Was it even an AI company?

Karthik started working as a “productologist” for Builder.ai in 2022. In another company, the role — assisting customers in building software — might have been called a product manager. But “productologist” relayed the buzzy way the U.K.-based startup billed itself: as a low-code or no-code artificial intelligence tool that made creating apps and websites as easy as “ordering pizza.” The job title, Karthik told Rest of World, was “confusing in the start.”

By the time he joined, Builder.ai was on its way to becoming one of the world’s hottest startups. It promised to use AI to radically simplify, and automate, the normally time-consuming and technically tedious process of building products. This was via two signature pieces of tech. The first were pre-coded blocks of reusable features — such as user logins, payment platform integrations, or 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 synthesize client requirements and start the building process for productologists like Karthik, who would get the project customized and on its way to completion. CEO Sachin Dev Duggal, who also had the title of “chief wizard,” claimed the AI could use its library of building blocks to construct at least 80% of an app or web site on its own. “Usually, the majority of the work is done in the first couple of hours” before human engineers take over, he said at a 2018 event.

Headquartered in London — with operations in Los Angeles, New Delhi, Dubai, Tokyo, and Singapore — Builder.ai marketed to smaller companies without the engineering teams or budgets to build software. Enticed by its promise, investors poured $100 million into Builder.ai’s series C round of funding in March 2022. After later raising money from Microsoft and others, the company would go on to ultimately be valued at $1.5 billion, with over 500 employees. Karthik, who asked to go by a pseudonym to avoid commenting publicly on a prior employer, joined as a remote worker in India soon after the series C round. He was excited to work in a customer-facing role.

But 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. Rest of World spoke to a dozen former Builder.ai employees from India, the U.S., and the U.K., including four on the product side, to get an inside look at the company’s ups and downs — and explore the question of what kind of product it really offered. Most requested anonymity to avoid hurting their prospects with new employers. 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.

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. Karthik described the reaction of one potential customer: “They were like, ‘We had an expectation that we would get something within a month because this is an AI-assisted development platform, and you said you build faster.’”

In March, Bloomberg reported the company — which had been without a chief financial officer since 2023 — 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.”) Builder.ai filed for bankruptcy in the U.S. last month.

Now, some analysts are holding up Builder.ai as a potential case of “AI washing,” in which companies falsely promote products or services as AI to attract attention and funding. Last year, the U.S. Securities and Exchange Commission launched a crackdown on tech companies it charged with false and misleading statements about their use of AI. These included one startup that called itself the “first regulated AI financial advisor,” and another that claimed to rely on voice recognition to run drive-through restaurants. The agency found that the companies had either misrepresented their AI capabilities or required far more human labor than advertised.

Carrie Osman, founder of the London-based tech consultancy Cruxy, called Builder.ai an example of a desperate drive toward valuation and funding at the expense of revenue. With so much investment being channeled into AI, she told Rest of World, some companies seem to think, “let’s just put AI on everything, and we’ll be fine.”

Builder.ai was founded in 2016 by Duggal, a high-flying serial British-Indian entrepreneur. At the time, AI-powered startups — which claimed to do everything from stopping cyberattacks to operating autonomous vehicles — had raised $5 billion around the world. Initially bootstrapped, Builder.ai received $29.5 million in its first major funding round in late 2018, in what was then reported as one of Europe’s largest ever series A investments.

A senior software engineer joined the company shortly afterward. “I really believed in the product when we initially got brought on,” he told Rest of World. “It was kind of taking this idea of traditional software consultancy, and automating it as much as possible.” 

Questions about the company’s promised tech soon emerged. In August 2019, The Wall Street Journal reported it was exaggerating its use of AI, according to current and former employees, and that most of its coding was done by humans. Earlier that year, the company’s former chief business officer had filed a wrongful termination suit, in which he accused Duggal of raising funds on proprietary tech that was “nothing more than smoke and mirrors.”

The company disputed the suit, which was ultimately settled. A spokesperson told the Journal at the time that Duggal had been clear the company’s AI technology was human-assisted. Lawyers representing Builder.ai in its U.S. bankruptcy case and a spokesperson for the company, who has since left her role, did not respond to requests for comment from Rest of World.

Manpreet Ratia, Builder.ai’s CEO at the time of its demise, also didn’t respond to a comment request. In a pair of LinkedIn posts, he denied that the company had misled people about its technology. “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,” he wrote. “It wasn’t a gimmick. It wasn’t smoke and mirrors.”

The company’s employees had created “a sophisticated, production-grade system,” he continued. “They built something real. And it worked.”

The senior software engineer said that while the company was aiming to build something “revolutionary,” it failed to materialize. “I think Sachin was a very good marketer and had a vision of how he expected things to be,” he told Rest of World. “Unfortunately, his vision didn’t match the reality a lot of the time.”

Yet Builder.ai continued raising money. After its series C in March 2022, Duggal said he cried tears of joy. By then, the company was claiming to “build software and apps up to 6x faster and up to 70% cheaper than traditional human teams.”

For employees, it was a wild ride.

Tanmay, a productologist who joined the company’s India office in 2022, told Rest of World he was drawn to the promise of using AI for development and impressed by the accessibility of Duggal and his senior team. “They were all just a Slack message away,” he said, requesting to use a pseudonym. But the company’s use of AI, he said, was still “not much.” Most of the work continued to be handled by humans.

That summer, Builder.ai held an international off-site meeting at a five-star hotel in Singapore. Close to 400 employees gathered from 33 countries. In one session, Serena Williams’ coach, Patrick Mouratoglou, called in via video conference to tell employees how they, too, could perform like champions. Tanmay, who attended the off-site, recalled the “grandeur and product vision.” 

“The founder said that we would be building 77 apps per day if we reach the pinnacle of our technology,” he told Rest of World. “That’s what I remember.” 

ChatGPT launched a few months later, in November 2022, accelerating AI hype and showcasing how large language models could create pages of code with just a few prompts. Builder.ai’s biggest funding round came in May 2023, with a $250 million investment led by the Qatar Investment Authority. Around the same time, the company announced a partnership with Microsoft and joined the ranks of OpenAI and Disney on Fast Company’s annual list of the World’s Most Innovative Companies.

Potential customers who visited the Builder.ai website before it was shuttered in June could book a demo with Natasha, the AI chatbot, who appeared as a woman’s voice behind a pulsing purple dot, ready to talk them through what they were hoping to build. Natasha could even recommend features from the company’s repository of building blocks, which could be added on to an order like products to a shopping cart.

When Natasha launched in September 2021, Builder.ai called it the “world’s first AI-powered product manager.” It said Natasha would run projects in real time, speeding up the process dramatically. As the interface between customers and productologists, Natasha would help translate ideas into features, set timelines, and calculate budgets. “Imagine a world where you can pick up the phone, speak to Natasha, and three days later have your app in the app store,” Duggal said at the time. “This is the future we are building towards.”

“The end goal — as the founder Sachin said — was to make it as easy as ordering a pizza,” said a productologist who was with the company for two years until just before its insolvency. “You talk to Natasha online, you tell her what you need, and then we build, refine, and use Natasha to build and refine.” 

In reality, this person said, much of the work was done by human coders via outsourcing companies, which Builder.ai referred to as “capacity partners.” Natasha mostly generated some “front-end” code and user interface. But even that needed to be checked by human coders. “A lot of the customized work was done by humans,” the productologist said. “Some things from the AI-generated code needed reworks as well.”

The use of outsourcing companies further delayed timelines, half a dozen employees said. “Builder said it’s an AI company, so obviously when you have AI you cannot have so many developers on your company payroll,” another former product manager told Rest of World, requesting anonymity. He called the capacity partner model “a really messed-up system.”

The hope internally, four former employees said, was that Builder.ai would continue to build out its library of reusable code even as the coding work was being outsourced, while also feeding data into Natasha to improve the company’s AI abilities. As an AI company, they needed to gather data, Tanmay said. “Natasha would learn and get better — for creating codes, creating product road maps.” 

This didn’t happen as quickly as these employees expected. “The company was trying to make Natasha smarter, but the pace did not really match the pace at which Builder was taking jobs,” Karthik said.

In the fall of 2022, Anurag Gulati, a new entrepreneur from Bengaluru, was keen to build a dating app. He wanted it to match people based on quizzes and games, and was on the lookout for a technical team to help turn the idea into reality. He stumbled upon Builder.ai on a startup forum. “It looked really legit,” Gulati told Rest of World.

After speaking with a “really smart” sales team at Builder.ai — who gave him an estimate of around $10,000 — Gulati says he decided to go with the company rather than hire his own tech team. “Building an app is like making a film. There’s so many moving parts,” Gulati said. “I didn’t have any issues giving them that chance.”

After making a deposit of around $500, Gulati continued with weekly payments, but gradually began to realize “that no way in the world this could be done” in the promised timeline. The company’s process was slow, he said, and at times the prototypes his productologist shared seemed to be getting “worse.”

As Gulati continued waiting for his app, he saw that Builder.ai had co-sponsored a major startup convention on the outskirts of New Delhi. The three-day event was advertised as a place where founders could pitch to thousands of investors, and showcase their products to big-name brands. Promotional materials suggested that Indian Prime Minister Narendra Modi, Alphabet’s Sundar Pichai, and X’s Elon Musk might attend.

Intrigued, Gulati traveled to Delhi. He visited the Builder.ai stall, stationed in the midst of the convention center. “They were demonstrating how the entire product worked,” Gulati recalled. “It looked so fancy, and the UI was so good, at least on the website, where you feel like you with your [own] hands are making an app that looks exactly like Instagram.” 

But miffed attendees soon realized the event didn’t feature many of the investors or big names it had promised. Videos circulated on social media showed hundreds of attendees crowded at the conference podium questioning organizers in chaotic scenes. “It was a sad sob-fest in the name of a startup convention,” Gulati recalled. (When the convention organizers were accused of misleading ticketholders, Builder.ai told the BBC it was “extremely disappointed” with the event and sought to revoke its sponsorship.)

When Gulati received early prototypes of his app, it was “very buggy,” he said, and not really what he’d asked for. By then he’d paid around $7,000, with around $3,000 pending. He used those funds to hire a tech team, and his startup slowly built the product itself, eventually pivoting from a dating app to a social-meetup platform. “I realized that if I keep paying them, I would have to probably wait another 2–3 months and spend more and eventually get nothing,” Gulati said. “I might as well use that money to build my own product.” 

Builder.ai was “always overpitching” itself, Gulati said. “It’s great sales but zero execution.”

Lawyers for Builder.ai told the Financial Times last year that Gulati had given the company full marks for customer satisfaction before walking away from his contract, which Gulati denied. 

Like several other employees, Karthik, the productologist, told Rest of World he was proud of the work he’d done at Builder.ai and disappointed the company hadn’t lived up to its promise. He recalled that customers often canceled projects or refused to pay because of delays and missed benchmarks. Many of them, he said, had “started planning product launches against the [promised] deadlines. When these deadlines were not met, it really felt bad, because a person has risked his or her future on Builder’s commitment.”

After Builder.ai’s May 2023 funding round put its valuation over $1 billion, the company said it would use the fresh capital to invest in more talent. The new additions included a finance professional based in India who reported to senior leadership, and requested anonymity.

He questioned how the company had spent the $250 million it had raised: “Why would you have so much burn?”

In retrospect, this former employee believes Builder.ai was a good idea, but that the company failed to run its business well. Outsourcing so much of its work to its capacity partners, he said, caused delays and raised costs. While Builder.ai did have a library of “reusable” product features, it was “not to the extent they marketed.” 

“They were never transparent about the company’s financials,” another frustrated former employee told Rest of World. “They raised over $445 million. … Where did all the money go?” 

In March 2025, Ratia, an executive with Builder.ai investor Jungle Ventures, became the new CEO after Duggal stepped down from the position. The company drastically reduced its head count by 270 employees. Shortly afterward, Bloomberg reported Builder.ai had raised an emergency loan the previous year, from a syndicate of firms, by forecasting its 2024 revenues to be four times higher than they turned out to be.

“The new CEO was giving his level best to fix things, but I believe the damage was done,” said a former project manager, who was with the company for 1.5 years until its insolvency.

On the evening of May 20, hundreds of employees gathered from around the world for a remote town hall. Ratia made a shocking announcement: Builder.ai had run out of money. The company was filing for bankruptcy, and they were all being let go.

“We all lost our jobs within 30 mins,” recalled one former product manager — who was on a client call when he learned he no longer had a job.

“I inherited a business that had suffered from financial mismanagement and poor Ops discipline. That part is not in dispute,” Ratia wrote later in his LinkedIn posts. “But the way we handled it matters. We acted with openness and transparency from day one.” 

He added: “THIS IS NOT A STORY ABOUT FAKE AI. It’s a story about a company that had to clean up its financial past — and nearly did. It’s a story about resilience. About real technology. About a team that never gave up.”

Builder.ai’s demise presents an odd twist for former employees like Karthik: Early in his tenure, he said, the company had told him the goal was to have its AI make roles like his redundant. Now that has happened — but not at all according to plan. “AI was always the assistant, and it was becoming better and better at being an assistant,” he said. But that’s all it was: an assistant. “It was still a long way from capturing the complete requirements.”