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Startup Obituary : Builder.ai
Builder.ai : The AI Dream That Fell Short. Builder.ai’s $1.5B Vision Ends in Bankruptcy. Challenges, and Lessons Behind the No-Code Startup’s Journey
Ram Gangisetty
June 11, 2025
What we started to see was that more and more people wanted to be empowered but without having to rely on developers
💡 The Pitch
Builder.ai promised to make building software “as easy as ordering pizza.”
And for a while, it looked like it worked.
Founded in 2016 by Sachin Dev Duggal, Builder.ai (formerly Engineer.ai) claimed to be the AI-powered magic behind effortless app creation. No code? No problem. Just describe what you want, and their AI assistant “Natasha” would take care of the rest—design, features, hosting, and deployment. All with fixed, transparent pricing.
The world believed it. So did Microsoft, SoftBank, and Qatar’s sovereign wealth fund. Over $450 million was poured in, pushing the company’s valuation to $1.5 billion.
Then came the unraveling.
🧱 What They Built
Builder.ai was a no-code platform with four core products:
Builder Studio: Custom app development with reusable code blocks.
Studio Store: Off-the-shelf apps for common business needs—e-commerce, fitness, restaurants, even e-learning.
Builder Now: A drag-and-drop prototyping tool to visualize ideas quickly.
Builder Cloud: Hosting and infrastructure bundled into your app package.
It sounded futuristic. Builder claimed apps could be assembled like Lego using AI. Their website was slick, their dashboards shiny, and their quotes predictable.
The secret? Human engineers—lots of them.
⚠️ The Red Flags
🧑🏽💻 “AI Washing”
Despite pitching itself as an AI-driven platform, most of the app-building work was done by 700+ engineers in India. “Natasha” wasn’t a product manager. She was a glorified chatbot. One former employee said the AI was “smoke and mirrors.” Internally, some joked AI stood for “Another Indian.”
The Wall Street Journal broke the story in 2019. Founder Sachin Dev Duggal shrugged it off. Investors didn’t.
💸 Fuzzy Math
Builder.ai reported $220M in revenue for 2024. The real figure? ~$50M.
Why the gap?
Allegations surfaced of “round-tripping” fake invoices—sending $180M in phantom service charges between Builder.ai and VerSe Innovation (parent of DailyHunt) to inflate sales. Internal docs showed projected revenue was overstated by up to 300%.
US prosecutors took notice. So did the company’s lender, Viola Credit, which pulled $37M from Builder.ai’s accounts in May 2025—leaving just $5M in restricted funds.
The company collapsed days later.
🔥 The Collapse
📅 Bankruptcy filed: May 20, 2025
📍 Jurisdictions: UK, US, UAE, Singapore, India
👥 Layoffs: Nearly all 1,500 employees
📉 Valuation at peak: $1.5B
📈 Actual ARR: ~$50M
📚 Assets: Insufficient to continue operations
🚪 Leadership Exit
Founder Sachin Dev Duggal stepped down in February 2025. New CEO Manpreet Ratia tried to restructure. It was too late. A final quote from Ratia:
“We are facing historic challenges and past decisions that no longer serve the business.”
Translation: the plane had already crashed.
Microsoft quietly scrubbed any mention of its Builder.ai partnership.
SoftBank and QIA took a loss—part of a growing list of burned bets.
On X, users compared Builder.ai to Juicero and Theranos: overhyped, underdelivered, vaporware dressed as AI.
One viral post read:
“$450M to rebrand Indian outsourcing with a chatbot UI. Incredible.” – @exec_sum
⚖️ Legacy
Builder.ai wanted to be Shopify for software. Instead, it became a cautionary tale—of AI hype, dishonest metrics, and growth without substance. Its platform did have genuine use cases (some customers loved the pricing transparency and prototype tools), but the foundation was unstable.
The company showed that the idea of democratizing software development is powerful. But to survive, execution—and ethics—matter more than buzzwords.
💬 “A billion-dollar valuation doesn’t mean a billion-dollar company. Sometimes, it just means a really expensive lie.”
Scorecard : Builder.ai
Dimension | Score | Reasoning |
|---|---|---|
Product-Market Fit | 2/5 | The idea of “software as easy as pizza” resonated, and some users found real value. But inflated adoption claims and reliance on human engineers broke trust. |
USP | 3/5 | AI-driven no-code software creation was a compelling vision. But under the hood, the core tech advantage—AI—was misrepresented, weakening its true edge. |
Timing | 4/5 | Builder.ai rode the AI and no-code wave perfectly post-2016. Market timing wasn’t the problem—execution and deception were. |
Founder Fit | 1/5 | Sachin Dev Duggal had ambition but not the credibility to match it after the “AI-washing” and financial misreporting. Founder behavior actively hurt the brand. |
Team (Execution) | 1/5 | Internal dysfunction, false financials, and misleading claims about technology revealed an execution culture built on optics over substance. |
🧑🏫 Lessons for Founders
1. Don’t Fake the Magic
You can’t slap “AI” on human labor and call it innovation. Customers may not know. But the press, prosecutors, and investors will find out.
2. Transparency Beats Hype
Builder’s revenue round-tripping wasn’t just unethical—it was a time bomb. One financial audit unraveled the entire operation.
3. Big Names ≠ Immunity
Microsoft and SoftBank bought into the dream. But big checks don’t mean a startup is sound. Even with elite investors, if the foundation is shaky, it all falls down.
4. AI Isn’t an Excuse
AI can be transformational—but using it as a buzzword without substance sets a trap. AI-driven startups must deliver true differentiation, not just smoke.
5. Avoid Single Points of Failure
Viola Credit’s loan covenants triggered the collapse. One investor, one false metric, one withheld payment—and it was game over.
I hope Builder.ai’s story highlights the need for good product, founder integrrity and good corporate governance.
Good luck with your stratup!
Cheers,
Ram
👉 My simple ask: It took hours to put together this post for you. I hope you forward this email to at least one founder friend or share on your social channels 🙏.
Startup Obituary is for educational purpose only not a business advice.
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