Artificial Intelligence

AI Startup Builder.ai Files for Bankruptcy

Published JUN 3 2025

Story

Above: The Builder.ai booth at the Web Summit in Lisbon, Portugal, on Nov. 3, 2022. Image credit: Zed Jameson/Contributor/Bloomberg via Getty Images

The Facts

Builder.ai, a London-based AI startup once valued at $1.5 billion, filed for bankruptcy protection last week after its major lender, Viola Credit, seized $37 million from company accounts, leaving only $5 million in restricted funds and paralyzing operations across five countries, including the U.K., U.S., UAE, Singapore, and India.
Bloomberg.com
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Ibtimes
Launched in 2016, Builder.ai marketed its platform as an AI-powered app development platform using a digital assistant called Natasha. The company claimed that its AI could create custom apps in days or weeks with minimal coding, making the process of building a website or app "as easy as ordering a pizza."
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Ibtimes
The Current
The company raised over $450 million from prominent investors, including Microsoft, Qatar Investment Authority, SoftBank's DeepCore incubator, and the World Bank's International Finance Corporation (IFC). In May 2023, Microsoft announced plans to integrate Builder.ai's platform with its Azure and AI services.
Bloomberg.com
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Yahoo! News
However, investigations have allegedly revealed that approximately 700 human engineers in India powered Builder.ai's platform, not the digital assistant Natasha, who used pre-built templates to fulfill client requests. The resulting apps were reportedly often buggy, dysfunctional, and hard to maintain.
Bloomberg.com
Business Today
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Investigations also uncovered alleged "round-tripping" between Builder.ai and Indian tech firm VerSe Innovation from 2021 to 2024, during which both companies reportedly invoiced each other for similar amounts without exchanging actual products or services, thereby inflating their revenue figures.
Bloomberg.com
The Indian Express
www.ft.com
U.S. and U.K. authorities are investigating Builder.ai's marketing practices and financial statements, with U.S. prosecutors issuing a subpoena demanding that the company hand over financial records, accounting policies, and customer lists as part of their probe.
Bloomberg.com
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Bloomberg.com

Sources Split

LEFT

CENTER

RIGHT

ESTAB
CRIT

CENTER

PRO
ESTAB

The Spin

Narrative A

Builder.ai's downfall is a cautionary tale in an era where "AI-powered" has become a marketing goldmine. For eight years, the company overstated its use of artificial intelligence, misleading investors by passing off human labor as automated innovation and convincing major corporations and sovereign wealth funds to invest in the illusion. Its collapse underscores the growing problem of AI washing — when companies inflate their capabilities to ride the AI hype wave — echoing the dot-com bubble's blend of buzzwords and investor FOMO.

Medium

Narrative B

Builder.ai's collapse serves as a wake-up call for anyone who believed no-code solutions could replace genuine product development. Behind the bold claims lay a costly, manual process supported by engineers and vendor lock-in. True software isn't just a login screen and dashboard — it's ownership, iteration, and strategy. If $450 million couldn't automate that, founders should rethink what it really means to build a product.

Medium