Once celebrated as a rising star in AI driven app development, Builder.ai has officially filed for Chapter 7 bankruptcy in the United States.
Behind the scenes, what looked like groundbreaking automation turned out to be a manual operation veiled in buzzwords and investors are now counting the cost.
With a peak valuation of $1.5 billion and support from industry giants like Microsoft and the Qatar Investment Authority, Builder.ai seemed poised to disrupt the no code software space.
But revelations of falsified AI claims, revenue manipulation, and misleading projections have shaken confidence in the startup and the broader AI sector.
Microsoft-Backed Builder.ai Crashes and Burns
Builder.ai’s core marketing revolved around an in house artificial intelligence named “Natasha”, which supposedly designed and developed apps autonomously.
However, internal reports and whistleblowers revealed that over 700 human engineers, mostly in India, were manually creating the apps mimicking the work Natasha was allegedly doing. In other words, the company’s most valuable “technology” was human labor disguised as AI.
Revenue Games: The $220 Million Illusion
Beyond the AI façade, Builder.ai was reportedly involved in questionable financial practices. The startup is accused of “round-tripping” revenues through a partnership with Indian firm VerSe Innovation, wherein both companies would bill each other for services never actually rendered essentially inflating revenue on paper.
In 2024, Builder.ai projected over $220 million in revenue. The real figure? Closer to $50 million, according to internal documents a glaring discrepancy that left major backers stunned.
A Broader Warning for the AI Sector
Builder.ai’s unraveling is more than just a startup’s failure it’s a cautionary tale for the tech world.
The hype around artificial intelligence has fueled record investments, but this case highlights how marketing smoke can obscure operational reality.
As the U.S. government opens probes into potential misrepresentation and investor deception, the Builder.ai scandal underscores a deeper issue in the startup ecosystem: when innovation becomes performance art, trust collapses.
The collapse of Builder.ai sends a clear message to investors, developers, and tech enthusiasts alike
Don’t believe the AI hype until you see the code.
