Back in May, Builder.ai, once a high-flying startup touted as a path-clearing AI-powered app builder, filed for bankruptcy in the U.S., culminating a spectacular fall that has become a cautionary tale in today’s AI frenzy.
The filing followed a flurry of activity that saw creditors seize its accounts, the revelation that it may have been using engineers in India instead of AI, and a probe into how Builder.ai’s founder spent money leading up to its collapse.
The collapse has sparked anger among Builder.ai’s investors, many of whom were stunned to learn of founder Sachin Dev Duggal’s multimillion-dollar share sales in the months leading up to bankruptcy.
Backed by investors including Microsoft and the Qatar Investment Authority, it raised over $500 million and achieved a unicorn valuation north of $1.3 billion.
So how did it start to crumble?
According to the Financial Times, Duggal liquidated more than $20 million in personal holdings while assuring investors that the company remained on solid footing. Those sales, executed before creditors seized Builder.ai’s accounts, have fueled questions about whether the founder prioritized personal wealth over corporate survival.
Insiders told FT that Duggal’s force of personality, combined with his branding as Builder.ai’s “chief wizard,” insulated him from tough questioning until it was too late. Board oversight lagged as the company aggressively marketed its AI vision, even as internal audits showed widening discrepancies in its finances.
The comeback kid that never was
Launched in 2016 under the name Engineer.ai, Builder.ai promised to enable businesses to build custom software with simple chat prompts that were, in its words, “as easy as ordering pizza.”
Investigations revealed that Builder.ai’s vaunted “AI” was largely a front for a vast network of human developers. Rest of World reported employees say the AI assistant “Natasha” handled barely any functional coding.
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