TLDR: London-based Builder.ai, once valued at $1.5 billion and backed by Microsoft, has filed for bankruptcy after revelations that its ‘AI-powered’ app development platform, featuring the AI assistant ‘Natasha,’ was allegedly operated by approximately 700 Indian engineers manually coding and posing as AI. The company also inflated its 2024 revenue projections by 300% and faces a federal investigation.
London-based AI startup Builder.ai, once a celebrated unicorn valued at $1.5 billion with significant backing from tech giant Microsoft and the Qatar Investment Authority, has filed for bankruptcy following widespread reports that its much-touted ‘AI-powered’ app development platform was largely a facade. Investigations reveal that the company’s flagship AI assistant, ‘Natasha,’ was allegedly operated by approximately 700 human engineers in India, who manually coded applications and interacted with clients, effectively ‘pretending’ to be artificial intelligence.
The dramatic unraveling of Builder.ai began in May 2025 when lender Viola Credit seized $37 million from the company’s accounts. This action reportedly exposed severe financial discrepancies, including a staggering 300% inflation of its 2024 revenue projections. While the company had promised creditors $220 million in sales, an independent audit revealed actual revenue to be a mere $50 million.
Sources indicate that the deception surrounding Builder.ai’s AI capabilities was not new. As early as 2019, The Wall Street Journal had raised questions about the company’s claims, suggesting a heavy reliance on human contractors rather than advanced AI. In the same year, former employee Robert Holdheim reportedly sued the company for $5 million, alleging he was dismissed after complaining that Builder.ai’s technology ‘did not work as promoted and was essentially nothing more than ‘smoke and mirrors’. Court filings from that period claimed the company informed investors that apps were ‘80% built’ by AI technology they had ‘barely even begun to develop’.
Despite these early warnings, Builder.ai managed to secure over $445 million in funding from prominent investors. The company’s promise to make software development ‘as easy as ordering pizza’ through its AI assistant ‘Natasha’ captivated the market, even as former employees described the company as ‘all engineer, no AI,’ with most development work performed manually by staff in India.
The fallout from these revelations has been severe. Builder.ai now reportedly owes millions in unpaid cloud computing bills, including $88 million to Amazon Web Services and $30 million to Microsoft. The company has also laid off approximately 1,000 employees. Founder Sachin Dev Duggal stepped down earlier this year, with Manpreet Ratia taking over as CEO, who reportedly uncovered internal discrepancies within the company.
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The collapse has triggered a U.S. federal investigation, with New York prosecutors actively seeking financial and customer records. This case highlights growing concerns about ‘AI-washing’ within the tech industry, where companies are accused of exaggerating their AI capabilities to attract investment and customers, often without substantial underlying technology.
