In one of the most shocking revelations of the AI boom, a billion-dollar startup once backed by Microsoft has collapsed after it was found that its “AI technology” was actually hundreds of human engineers in disguise.
Builder.ai, a London-based company that promised to revolutionize app development through artificial intelligence, has filed for bankruptcy. The reason? Its much-touted AI assistant, “Natasha,” wasn’t powered by cutting-edge technology—but by around 700 Indian developers manually coding requests while pretending to be bots.
Founded in 2016, Builder.ai marketed itself as a no-code platform powered by AI, allowing users to build apps as easily as ordering a pizza. The company raised over $445 million in funding, including a major $250 million investment from the Qatar Investment Authority and strategic backing from Microsoft.
But the illusion started falling apart in May 2024. Lender Viola Credit, which had issued a $50 million loan to the company, withdrew $37 million from Builder.ai’s accounts after uncovering financial inconsistencies. The company was left with just $5 million in restricted funds, essentially crippling its operations.
An audit revealed that Builder.ai had inflated its revenue figures by 300%, claiming $220 million in earnings when the actual figure was closer to $50 million. Concerns about the company’s claims had been raised as early as 2019 when a Wall Street Journal report questioned its AI capabilities. That same year, a former executive even filed a lawsuit alleging the company misled investors.
The real turning point came when current CEO Manpreet Ratia, who replaced founder Sachin Dev Duggal earlier this year, reportedly discovered the company’s inner workings weren’t AI-powered at all. Instead, hundreds of engineers in India had been manually performing the tasks the company claimed were handled by artificial intelligence.
Linas Beliūnas, Director at financial firm Zero Hash, revealed on LinkedIn:
“Wild: $1.5 billion AI unicorn just collapsed as it turns out their ‘AI backend’ was just Indian developers pretending to write code.”
He also alleged that the company “reported fake revenue to investors” and managed to keep the facade running for eight years.
With bankruptcy proceedings now underway in the US, UK, UAE, Singapore, and India, the collapse is being seen as a major cautionary tale in the post-ChatGPT era, where “AI washing” — the practice of rebranding manual services as AI — is drawing increasing scrutiny.
Builder.ai confirmed its collapse on LinkedIn, stating:
“Despite the tireless efforts of our current team and exploring every possible option, the business has been unable to recover from historic challenges and past decisions that placed significant strain on its financial position.”
The company has now laid off over 1,000 employees and owes millions to cloud providers like Microsoft and Amazon. A federal investigation in the U.S. is also underway, with prosecutors in New York requesting financial records and customer data.
