Anyone can create web and mobile applications “at a fraction of the cost and time of traditional software development” with Builder.ai, which bills itself as “an AI-powered composable software platform.” Founded and based in London in 2016 by Sachin Dev Duggal, a graduate of Imperial College, the no/low-code tech firm created a lot of buzz early on and attracted investments from a number of well-known companies, including Microsoft in 2023. Builder.ai (formerly known as Engineer.ai) was valued at an incredible USD $1.5 billion at its peak. It filed for bankruptcy a week ago.
“Despite the tireless efforts of our current team and exploring every possible option, the business has been unable to recover from historic challenges and past decisions that placed significant strain on its financial position,” Builder.ai posted from its official handle on professional networking website LinkedIn. “Our immediate priority is to support our employees, customers, and partners through this difficult time.”
A major factor in Builder.ai’s demise was AI. You might say that the writing was on the wall as an increasing amount of coding labor at businesses, big and small, is being done by AI, maybe at the same or even faster rate. Microsoft, one of its major investors, has said publicly that at the time of writing, AI was writing around 30% of the company’s code. Under the pretense of increasing productivity and simplifying processes, Redmond has been laying off software workers in droves.
You might be wondering, though, if a company that was using AI to write code long before it became the viral sensation it is today thanks to significant advancements from Google and OpenAI would be better equipped—and presumably more resistant to the shifting tech landscape—to not only confront it head-on but also to fight back forcefully and exhibit some resilience. It turns out that there was a darker side to Builder.ai that we, the clients and investors, were unaware of. This part of the company was the reason for its downfall.
To “make building an app so easy, anyone can do it,” the startup that created a hit song and dance about artificial intelligence and its in-house virtual assistant, Natasha, was reportedly outsourcing its work to an office in India where 700 human engineers laboriously wrote the code that Builder.ai claimed was produced by its Lego-style artificial intelligence tech platform. Bernhard Engelbrecht, the creator of Ebern Finance, posted on X, the website then known as Twitter, that “everything was like real artificial intelligence — except that none of it was.”
A Media report claims that although some of it was revealed by “buggy, dysfunctional, and difficult to maintain” end products, the true whistleblower act occurred when one of its investors, Viola Credit, took a portion of its USD $50 million investment while regulatory restrictions in India prevented additional funding, leaving Builder.ai unable to pay its staff and ultimately ceasing operations. Additionally, it was stated that Builder.ai engaged in “round-tripping” of cash with VerSe, an Indian social media company located in Bengaluru, in order to exaggerate sales statistics. This was allegedly done in order to draw in investment from other businesses.
“We will work closely with the appointed administrators to ensure an orderly process and to explore all available options for parts of the business, where possible,” Builder.ai’s post reads.
The demise of Builder.ai serves as a warning to today’s AI-first startups: although hype may attract investors, unsustainable business models and a dependence on smoke-and-mirrors outsourcing cannot take the place of genuine technological breakthrough.
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