Prime Highlights:
- Builder.ai, a Microsoft and Qatar wealth fund-backed British AI startup, has fallen into insolvency as a result of escalating financial issues and mismanagement.
- The startup, which was valued at $500 million, skipped payroll and missed big debts to leading tech partners.
Key Facts:
- Builder.ai is in debt to Amazon by $85 million and to Microsoft by $30 million.
- Revenue in 2023 was restated to as low as $140 million, and 2024 projections were cut by 25%.
- Founder Sachin Dev Duggal resigned as CEO but continues to serve on the board.
Key Background :
Builder.ai, a software-as-a-service platform aimed at making app-making as straightforward as ordering from a menu, has fallen into insolvency. The London-based firm embarked on formal proceedings after being unable to bounce back from extreme financial instability, brought about by internal leadership problems, overstated revenue reporting, and accumulating debts.
The company, which has been operating as Engineer.ai Corporation, made the announcement in a company-wide meeting to employees. The move follows an internal investigation that cited disturbing financial mismanagement under the old leadership. Founding member Sachin Dev Duggal, who resigned as CEO in early 2025, is still on the board under the appellation “chief wizard.” His tenure had a cloud of controversy, such as being included in a criminal probe in India, which he denied.
Incoming CEO Manpreet Ratia revealed Builder.ai had defaulted on major liabilities, including payroll, causing the cash accounts to be frozen. The company’s financial situation worsened even after it raised $75 million from investors and obtained a $50 million credit line in late 2024. At the time the company was taken over by Ratia, the available cash had fallen to around $7 million.
Major financial stakeholders Amazon and Microsoft are among the biggest creditors, with Builder.ai owing them $85 million and $30 million, respectively. The firm also conceded that it restated its 2023 revenue from prior numbers to as low as $140 million and lowered its future revenue estimates by 25%. These confessions were a big warning sign to investors and customers alike.
Established in 2016, Builder.ai positioned itself as a low-code/no-code platform driven by artificial intelligence. It was working towards democratizing app development by eliminating the requirement for conventional coding abilities. The firm attracted significant attention and capital, including strategic backing from Microsoft and Qatar’s sovereign wealth fund.
The collapse of Builder.ai reflects a growing caution in the tech investment space, especially as companies push for high growth without adequate financial governance. Its downfall not only impacts stakeholders and employees but also highlights the need for transparency and oversight in the AI startup landscape.
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