US Prosecutors Subpoenaed Builder.ai Financials Weeks Before $1.5 Billion Startup Collapsed

US Prosecutors Demand Builder.ai Data Amid Sales Overstatement Allegations

US prosecutors have formally requested Builder.ai's financial statements and other key documents, suggesting heightened legal scrutiny just weeks before the company's collapse.

According to an internal email from Builder.ai’s General Counsel Adi Vinyarsh, employees were instructed to preserve documents after the US Attorney’s Office for the Southern District of New York issued a subpoena. This subpoena sought information on accounting policies and a customer list, following reports about Builder.ai’s leadership changes and financial challenges.

What Happened at Builder.ai?

Builder.ai, an AI company known for helping businesses create custom smartphone apps quickly, faced serious allegations of inflating sales figures multiple times. These claims surfaced after its founder and CEO, Sachin Dev Duggal, was removed from his position in February.

The subpoena from the Manhattan US Attorney’s Office, a highly influential federal prosecutor, signals a formal investigation. Neither the company nor Duggal has publicly responded to requests for comment.

Impact on Builder.ai and Investors

Once valued at approximately $1.5 billion during a 2023 fundraising round led by the Qatar Investment Authority, Builder.ai recently appointed an administrator to manage its insolvency and began winding down operations.

The company’s downfall accelerated after creditors, led by Israeli firm Viola Credit, seized most of its cash. This move followed revelations that Builder.ai had overstated its revenue forecasts by an alarming 300%.

Builder.ai had attracted notable investors including Microsoft Corp., which made an equity investment in 2023 as part of a strategic partnership, along with the World Bank Group’s International Finance Corp., Hollywood producer Jeffrey Katzenberg’s WndrCo, Lakestar, and SoftBank Group Corp.’s Deepcore incubator.

What Sales Professionals Can Learn

• Transparency is critical: Inflated sales numbers can lead to severe legal and financial consequences that damage company reputation and careers.
• Accountability matters: Maintaining accurate records and honest communication with investors and customers builds trust and long-term value.
• Leadership changes signal risk: Sudden executive departures can be a red flag, especially when paired with financial irregularities.

For sales teams working with AI-driven products or startups, understanding the importance of credible data and ethical sales practices is essential. Staying informed about legal and financial risks can protect your role and your organization.

Learn more about AI applications in sales and how to stay ahead with verified information at Complete AI Training.