The person I want to talk about today is Sachin Dev Duggal, the founder and former CEO of AI programming company Builder.ai.
Not only did he create a fake AI company that was "all artificial and without intelligence"
He swindled hundreds of millions of dollars in financing from giants such as SoftBank and Microsoft, and his valuation reached 1.5 billion.
And they dared to falsely report 300% of their revenue to investors.
Yes, there is no AI in the background of this company, but only a group of Indian guys pretending to be AI and writing code.
What’s even more shocking is that this scam lasted for 8 years.
But this week he was done.
Image source: Sachin Dev Duggal, founder and former CEO of TechFlow
With the latest "fraud" exposed, the previous round of investors were so scared that they quickly froze the remaining $37 million in their investment accounts (a total investment of $50 million), leaving only $5 million in the company's account. However, this $5 million is also restricted by the government's regulations on the outflow of funds and cannot be used to pay salaries.
Builder.ai had no choice but to file for bankruptcy. The CEO at this time had long been replaced by Manpreet Ratia, who was there to “clean up the mess” - founder Sachin Dev Duggal resigned as CEO in February and was replaced by Ratia.
The farce directly led to the largest bankruptcy of an AI startup since the release of ChatGPT in 2022, a company that was valued at more than $1.5 billion in its previous round of financing.
Image source: Public account‧New Wisdom Builder.ai bankruptcy liquidation notice
Image source: The official website of the public account Builder.ai is no longer accessible, with only two contact email addresses left.
In addition to Viola Credit, which provided $50 million as mentioned above, the "sucker" in this storm also includes the Qatar Investment Authority (QIA), one of the world's largest sovereign wealth funds, which led a $250 million financing two years ago.
And Microsoft, which also invested in the same year and became a strategic partner. They even integrated Builder.ai into their cloud services.
Golden Age
Builder.ai was born in London out of founder Sachin Dev Duggal’s dissatisfaction with traditional software development.
In the golden age of AI-driven storytelling, Builder.ai has a tagline that’s too good to ignore: making software development “as easy as ordering a pizza.”
The startup, founded in 2016, claims it can democratize software development by enabling non-engineers to build complex applications through a platform it says is powered by AI.
The AI hype has worked wonders for investors.
Builder.ai, formerly known as Engineer.ai, is based in London and Los Angeles and raised $29.5 million in 2018 from investors including Deepcore Inc., a wholly owned subsidiary of SoftBank.
Other investors include Zurich-based venture capital firm Lakestar, an early investor in Facebook Inc. and Airbnb Inc., and Singapore-based Jungle Ventures.
Image source: WeChat public account‧Sachin Dev Duggal, founder of New Wisdom, at a technology conference in his early years
By 2022, Builder.ai had raised $195 million, and in May 2023, it added another $250 million in a round led by the Qatar Investment Authority (QIA).
That same year, Microsoft joined as a strategic investor and partner, integrating its Builder.ai platform into its cloud service offerings.
Image source: WeChat public account: New Wisdom
Image source: WeChat public account: New Wisdom
This brings huge recognition, and with it comes equally huge expectations.
Over the next eight years, it raised more than $445 million from investors including Microsoft and the Qatar Investment Authority, and the company’s valuation crossed the $1.3 billion mark.
Builder.ai’s solution is to combine modular code components with human developers, coordinated by AI.
Its platform, called Builder Studio, comes with a digital assistant named Natasha that promises a seamless user experience driven by AI.
Image source: WeChat public account ‧ New Wisdom Builder.ai The cool official website is now completely inaccessible
But the reality behind this vision is that most of the work is done by developers in India, not AI.
In 2019, The Wall Street Journal revealed an embarrassing truth: Builder.ai’s AI was more of a marketing gimmick than an engineering breakthrough.
Image source: WeChat public account: New Wisdom
Several current and former employees said some pricing and timetable calculations were done by traditional software, but most of the rest was done manually by employees.
If you tell your customers you’re using AI, chances are they won’t be thinking of technology from the 1950s. Decision trees are a very old and simple technique.
These people said the company lacked natural language processing technology and that the decision trees used internally should not be considered AI.
As the report said, the AI company Builder.ai is "all artificial and no intelligence."
This gulf between narrative and reality will determine the company's trajectory.
Only artificial, no intelligence
Signs of Builder.ai’s deception weren’t limited to a 2019 Wall Street Journal report.
According to revelations from multiple former employees and insiders on Reddit, Builder.ai may have only had artificial intelligence but no intelligence from the beginning.
Several former employees said it was impossible for management to be unaware of the ongoing fraud and simply turned a blind eye. I have worked in this company for two years and have hardly seen any project deliveries.
Image source: WeChat public account: New Wisdom
In addition, a former employee revealed that Builder.ai extremely suppressed employee wages, even saying that "the salary is rubbish," and that it is not an AI-oriented company but a marketing-oriented one.
Image source: WeChat public account: New Wisdom
Image source: WeChat public account: New Wisdom
A user found himself finding many "incomprehensible" things when using Builder.ai's services a year ago.
Image source: WeChat public account: New Wisdom
These include: extremely poor development experience, missing modules, unusable code, inability to access the IDE, and even some code being completely unmodifiable.
Image source: WeChat public account: New Wisdom
There are also insiders who directly revealed that Builder.ai is actually a company that uses the "ai domain name" to commit fraud. Companies hire a large number of low-cost developers to "pretend AI".
Image source: WeChat public account: New Wisdom
Hour of Reckoning
As time went on, the cracks within Builder.ai continued to widen.
According to insiders, the company has long relied on exaggerated revenue forecasts and AI hype to obtain financing.
A large global workforce and costly expansion plans, including opening new markets in Southeast Asia and the Middle East, have led to a rising burn rate.
Image source: WeChat public account: New Wisdom
Meanwhile, the former CEO’s legal problems have piled up.
According to the Financial Times, Duggal is involved in a criminal money laundering investigation in India. In response, Builder.ai’s general counsel said in a now-deleted blog post that Duggal was just a witness in the case.
Still, Duggal resigned as CEO in February but remained on the board and retained his “wizard” title.
He was replaced by Manpreet Ratia, a former senior executive at Amazon and Flipkart, who was previously managing partner at Jungle Ventures, an investor in Builder.ai.
Image source: WeChat public account: New Wisdom
Then came the moment of reckoning.
In May 2025, Viola Credit, one of Builder.ai’s senior investors, seized $37 million from the company’s accounts, triggering a default.
Chief Executive Manpreet Ratia, who took over to pick up the pieces just two months ago, has just $5 million in cash left.
A few days later, he filed for bankruptcy.
It turns out that Builder.ai provided inflated financial projections to lenders and misrepresented the health of its revenue.
This breach of the covenant clause allowed Viola Credit to take drastic action.
But the bigger reason behind this structural collapse is that their business model never matched their branding.
Image source: WeChat public account: New Wisdom
Ratia admitted defeat in a company-wide conference call. Most of the global staff were laid off, and the product that was once positioned as a flagship for AI innovation was shelved.
On May 20, it officially declared bankruptcy.
A month before the failure, the company went through a last-minute restructuring, laying off 220 of its 770 employees.
Builder.ai said this week it would appoint an administrator to oversee bankruptcy proceedings after it was “unable to recover from historical challenges and past decisions that have placed significant pressure on the company’s financial condition” despite management’s “tireless efforts.”
According to the Financial Times, Builder.ai owes a total of $85 million to Amazon and $30 million to Microsoft.
Entrepreneurial Star
Why did Duggal gain the favor of investors in the first place? Be it Qatar Capital, SoftBank or Microsoft, none of them can be easily deceived.
This brings us to Duggal’s “brilliant” resume.
Sachin Dev Duggal started his career by building PC computers at the age of 14, and by the age of 17, he had created one of the world's first automated currency carry trading systems for Deutsche Bank.
He launched his next venture, cloud computing company Nivio, at the age of 21 while still studying at Imperial College London.
Image source: WeChat public account: New Wisdom
After leaving Nivio, which was valued at $100 million, Duggal began to focus on building a photo-sharing app called Shoto.
However, he had difficulty finding a front-end developer that met his needs. Duggal couldn’t help but wonder: if he himself had trouble finding reliable help, how could someone without an engineering background start building an app?
So he founded Builder.ai, which aims to make software building "as easy as ordering a pizza."
Everyone knows the rest of the story.
AI Whitewashing
In the industry, Builder.ai's model of packaging traditional technical services as AI to defraud funds is called "AI washing."
Its failure has also reignited the discussion on the necessity of technical due diligence in AI transactions.
For customers, many of which are startups and small and medium-sized enterprises, the sudden outage left them scrambling to rebuild or migrate their applications. This highlights the risks of relying on emerging players to provide mission-critical software infrastructure.
Despite this blow, the broader low-code/no-code market has remained resilient.
Gartner predicts that by 2028, 60% of new enterprise applications will be developed using such platforms. The global market size is expected to reach US$26 billion by the end of this year.
From accolades from Gartner to rankings from Fast Company, from celebrity investors to top company logos displayed on its website, Builder.ai appears to be one of the great success stories of the AI age.
But like many companies built on hype, it confused scale with sustainability, and visibility with viability.
Ultimately, the story of Builder.ai is less about a failed technology than the consequences of pretending it ever worked.
In the investment boom driven by ChatGPT, scale, valuation and exposure are not equal to moats.
The story of Builder.ai is very similar to that of Theranos in the past - when there is a 1 mm gap between technological promises and actual capabilities, the capital market will tear open a 1 km abyss in the next second.
Image source: WeChat public account: New Wisdom
This article is authorized to be reproduced from: (TechFlow)
Original author: New Wisdom
"Fake AI company defrauded hundreds of millions of magnesium! Behind all this are Indian engineers pretending to be AI, even Microsoft was deceived. This article was first published in "Crypto City"