The Rise and Fall of Builder.ai
What Was Builder.ai and Why Did It Shut Down?
Builder.ai was an AI startup promising to simplify app and website development. Despite its bold marketing, employees reveal that the technology fell short, which contributed to the company’s bankruptcy.
What Did Builder.ai Actually Do?
Founded in 2016 by Sachin Dev Duggal, Builder.ai operated from London with offices worldwide, including Los Angeles, New Delhi, Dubai, Tokyo, and Singapore. It positioned itself as a major player by claiming to use AI to speed up the complex process of software development.
Backed by investors like Microsoft and the Qatar Investment Authority, Builder.ai raised up to $445 million and reached a valuation of $1.5 billion, employing over 500 people.
The company’s technology centered around two main elements:
- Pre-coded reusable software blocks — features like user logins, payment integrations, and contact pages — designed to be assembled like Lego pieces.
- An AI chatbot named Natasha, pitched as a groundbreaking tool that could handle the first 80% of product building, slashing human labor and development time drastically.
The goal was to make software creation as simple as ordering a pizza: you tell Natasha what you need, and the product gets built and refined with minimal human input.
From a Microsoft-Backed Startup to Bankruptcy
However, the reality did not match the promise. Interviews with former employees and investigative reports show that Builder.ai relied heavily on human developers, many outsourced to India and Ukraine, to finish most projects.
This approach led to longer delivery times than clients expected, causing frustration and cancellations. As early as 2019, there were accusations that Builder.ai exaggerated its AI capabilities — a practice sometimes known as "AI washing," where companies overstate AI use to attract attention and funding.
Why Did Builder.ai Collapse?
By March 2025, Builder.ai faced serious financial troubles. Bloomberg reported inflated revenues, and an Israeli lender seized much of the company’s cash. Additional reports alleged questionable accounting practices involving fake income through billing between Builder.ai and another company, VerSe.
In response to mounting pressure, Builder.ai cut 270 jobs and appointed Manpreet Ratia as CEO. Despite efforts to recover, the company ran out of money by May 2025 and filed for bankruptcy, letting go of all remaining employees.
Ratia later defended the company’s AI platform, stating it was a genuine product combining large language models with orchestration layers to automate software assembly, not just marketing hype.
Looking back, former employees expressed mixed views. Some believed the concept was solid but poorly managed, while others criticized the lack of transparency about how the $445 million in funding was spent.
Key Takeaways for IT and Development Professionals
- AI Hype vs. Reality: Even with significant funding and high valuations, the actual use of AI technology can differ substantially from marketing claims.
- Human Labor Remains Crucial: AI tools often assist rather than replace skilled developers, especially in complex projects.
- Delivery Expectations Matter: Overpromising on speed without realistic timelines can damage client trust and lead to business failure.
- Financial Transparency Is Vital: Startups must manage funding efficiently and maintain clear communication with stakeholders to survive in competitive markets.
For professionals interested in expanding their AI skills and understanding practical AI applications in software development, Complete AI Training offers a variety of courses that cover AI tools and automation techniques relevant to today’s tech landscape.
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