Builder.ai collapses after sales scandal and bankruptcy filing shakes AI sector

Builder.ai Files for Bankruptcy After Sales Scandal

UK-based AI startup Builder.ai declared bankruptcy in a Delaware court on June 2, 2025, after creditors took control of most of the company’s funds. Court filings revealed the company had exaggerated its 2024 sales projections by 300%, which triggered the seizure of cash reserves.

The list of creditors includes major names such as Amazon, Microsoft, US law firm Quinn Emanuel, and Israeli private intelligence firm Shibumi Strategy. This development has sent shockwaves through the AI and sales communities.

What Went Wrong?

Builder.ai, once valued at $1.5 billion, reportedly fabricated deals with Indian social media firm VerSe Innovation to inflate revenue figures. VerSe’s co-founder, Umang Bedi, denied these claims, calling them “baseless and false.”

The situation worsened in early 2025 when founder Sachin Dev Duggal stepped down as CEO and lost control over board seats. Manpreet Ratia from investor Jungle Ventures took over and initiated an audit of the company’s 2023 and 2024 financials.

By May, Builder.ai warned staff about a potential insolvency filing, citing an inability to recover financially from “historic challenges and past decisions.” Before the official bankruptcy filing, creditors led by asset manager Viola Credit had already seized most of the company’s cash.

Lessons for Sales Professionals

• Accuracy in Sales Forecasting: Inflated sales numbers can lead to major credibility and financial risks. Transparency with projections is crucial.
• Verification of Deals: Fabricated deals can cause irreversible damage. Sales teams must ensure all agreements are legitimate and verifiable.
• Leadership Impact: Changes in leadership can affect company stability. Staying informed about internal shifts helps in managing client relationships and expectations.
• Financial Health Awareness: Early warning signs like audits or cash seizures should prompt caution and proactive communication with stakeholders.

For sales professionals looking to sharpen their skills in AI-driven markets, exploring relevant courses can provide an edge. Check out Complete AI Training’s sales-focused AI courses to stay ahead.

Builder.ai’s collapse serves as a reminder that no matter how promising the technology, honesty and solid financial practices remain the backbone of sustainable success.