Builder.ai’s $1.5B rise and collapse highlights fragility of AI boom

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Builder.ai, once hailed as one of the most innovative artificial intelligence start-ups, has gone from a $1.5 billion valuation to bankruptcy in just a few months. The London-based company, with operations in India and California, is now being liquidated in Delaware after revelations that it had overstated its sales, the New York Times reported Sunday.

Founded in 2016 as Engineer.ai, the company marketed itself as a platform to help small businesses quickly build apps and websites. By 2023, it had raised $450 million from backers including Microsoft (MSFT [https://seekingalpha.com/symbol/MSFT]), Qatar’s sovereign wealth fund and prominent investors such as Jeffrey Katzenberg. At its peak, Builder promoted “Natasha,” billed as the world’s first AI product manager, which was supposed to make software creation as simple as ordering a pizza.

Behind the glossy branding, however, finances told a different story. Internal documents revealed that reported revenue of $217 million in 2024 was closer to $51 million, while the company owed $75 million to Amazon Web Services (AMZN [https://seekingalpha.com/symbol/AMZN]). In February, founder and CEO Sachin Dev Duggal stepped down after the board uncovered the discrepancies.

The collapse has fueled broader concerns about “fake AI” in Silicon Valley, where attaching the label can help attract funding. “If you want funding, you just say a bunch of A.I. words,” David Gerard, who runs the debunking site _Pivot to A.I., _said to the Times. “You don’t have to actually have A.I.”

Builder’s downfall follows other scandals. Prosecutors have accused New York shopping app Nate of outsourcing tasks to contractors while claiming to use deep learning, and the SEC charged the founders of GameOn, a so-called AI sports chat start-up, with fraud.

Builder’s reliance on hype over substance ultimately proved fatal. Company founder Duggal has since rebranded himself as a consultant offering advice on AI, though his new website, like much of Builder’s promise, remains empty, the Times reported.

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