One of the UK’s most-hyped AI startups, Builder.ai, has filed for insolvency after lenders uncovered what appear to be fake sales and forced the company to drastically revise its revenue forecasts—slashing projections to just a quarter of original estimates.
Founded in 2016, Builder.ai promised to make building apps as easy as ordering pizza. Backed by heavyweight investors like Microsoft and the Qatari Investment Authority, the company had raised over $500 million, with its last funding round bringing in $250 million in May 2023, right at the height of the post-ChatGPT AI frenzy.
But the fairytale quickly unraveled. Internal documents reviewed by the Financial Times revealed that previously reported revenue figures were vastly overstated. Builder initially claimed $220 million in projected revenue, but that number was quietly cut down to just $55 million. For 2023, recorded sales were also revised downward—from $180 million to only $45 million. These red flags triggered a full-blown investigation and a crisis of confidence among creditors.
A Legal Probe and Leadership Shakeup
The fallout began under the leadership of founder Sachin Dev Duggal. Concerns had already been mounting as sales booked by the company remained uncollected for long periods, casting doubt over whether the revenue figures were ever real to begin with. After Duggal’s departure in March, Jungle Ventures’ Manpreet Ratia took over as CEO and immediately launched a legal investigation into the company’s sales practices.
The law firm hired by Builder’s new leadership uncovered alarming patterns. According to sources familiar with the matter, some of the company’s reported revenues involved “resellers” that may not have actually existed. The implication: Builder may have been inflating its revenue using shell partners to appear more successful than it really was.
Lenders, including Viola Credit, Cadma Capital, and Atempo Growth, responded by calling a default on a $50 million loan issued last October. They seized over $40 million in cash from Builder’s accounts and cut off access to the rest of the funds, which CEO Ratia said made it impossible for the company to continue operations.
In a leaked note to investors, Ratia criticized the lenders, arguing that the company’s turnaround plan had been working and that Q1 revenues had already exceeded expectations. But with the tap turned off, the lights went out.
Builder has since confirmed that it is focused on an “orderly wind down” and said it’s working to preserve value for employees. The company declined to comment further on the ongoing investigation.
