Touted as a $1.5 billion (£1.11 billion) unicorn and backed by the likes of Microsoft and Qatar’s sovereign cash pile, the company is now exposed as less AI juggernaut and more offshore theatre troupe. Turns out the AI was just a bunch of developers in India pretending to be bots, writing code by hand while the pitch deck told investors it was magic.
Bloomberg reports that Viola Credit, a key lender, yanked $37 million (£27.33 million) from the company’s accounts, leaving Builder.ai with barely enough to keep the lights on. That move effectively paralysed its operations in the UK, US, UAE, Singapore, and India. They’re now lurching into bankruptcy filings.
The rot goes deep. CEO Manpreet Ratia, parachuted in to clean up founder Sachin Dev Duggal’s mess, admitted that most of the workforce has been sacked. And not long ago, Builder.ai was still trying to charm investors with inflated sales numbers and two years of dodgy financials, according to insiders. Now those same investors are choking on the smoke from what used to be their money.
Backers like the World Bank's IFC, SoftBank’s DeepCore, and WndrCo might want to reconsider their screening processes. Gurus with PowerPoints and fake bots apparently got through without much trouble.
Zero Hash's Linas Beliūnas blew the lid off the AI charade, posting on LinkedIn that “the company had no AI and instead was just a group of Indian developers pretending to write code as AI.” It wasn’t just a little embellishment. Builder.ai strung this act along for eight years.
Viola’s $50 million loan, extended last year, has ended in spectacular fashion. The firm pulled most of the cash, leaving just $5 million (£3.69 million) in restricted funds. That money is stuck in India due to regulatory red tape, so payrolls aren’t getting met and operations are frozen.
Industry observers like Info-Tech’s Phil Brunkard are now warning that this is just one example of an AI bubble built more on buzzwords than breakthroughs. “Many AI companies expanded rapidly, fuelled by hype,” Brunkard said.
The Qatar Investment Authority, which led a $250 million (£184.68 million) funding round, is now holding one of the shortest ends of an expensive stick. Regulators are sniffing around Builder.ai’s marketing practices, and what they find may force tighter scrutiny on how AI firms sell their snake oil.
