Over the past eight years, Builder.ai raised more than $445 million, attracting major investors like Microsoft and the Qatar Investment Authority, and reached a valuation of over $1.3 billion. However, by May 2025, the company went bankrupt.
In an era focused on AI-driven storytelling, Builder.ai aka Engineer.ai had an appealing pitch: creating software should be as easy as ordering pizza.
Founded in 2016, the startup claimed to make software development accessible to everyone, allowing non-programmers to build complex applications using its supposedly AI-powered platform.
Despite raising substantial funds and achieving a high valuation, it ultimately filed for bankruptcy in May 2025.
Builder.ai originated in London, inspired by co-founder Sachin Dev Duggal’s dissatisfaction with traditional software development methods.
He aimed to merge modular code components with human developers, all coordinated by AI. The company claimed to improve the process by using its platform, “Builder Studio,” along with a digital assistant named “Natasha” to provide a smooth user experience powered by artificial intelligence.
However, many customers were unaware that most of the development work was performed by Indian developers rather than AI.
In 2019, The Wall Street Journal revealed that Builder.ai’s AI was more of a marketing strategy than a real technological advancement, describing it as “all engineer, no AI.” This discrepancy between the company’s claims and the reality would shape its downfall.
The appealing AI narrative attracted significant investment. By 2022, Builder.ai had secured $195 million, and in May 2023, it raised another $250 million led by the Qatar Investment Authority.
That same year, Microsoft became a strategic investor and partner, incorporating Builder.ai’s platform into its cloud services. This partnership brought immense validation and high expectations.
Internally, however, issues were surfacing. The company had relied on exaggerated revenue forecasts and dubious AI claims to attract funding, as reported by insiders.
An expanding global workforce and ambitious plans for entering new markets in Southeast Asia and the Middle East increased its expenses significantly.
Turning Point
Recently, Viola Credit, one of Builder.ai’s main lenders, seized $37 million from the company’s accounts, leading to a default. CEO Manpreet Ratia, who had just taken over two months earlier to fix the problems, found himself with only $5 million left. Shortly after, he filed for bankruptcy.
It turned out that Builder.ai had misled lenders by providing inflated financial forecasts, which misrepresented its revenue situation.
This breach allowed Viola to take drastic action. The deeper issue was that Builder.ai’s business model didn’t align with its branding.
During a company-wide meeting, Ratia acknowledged the dire situation, resulting in mass layoffs and the shelving of their flagship product.
This incident also highlights concerns about “AI washing,” where companies present traditional technology as AI to attract investments.
Observers note that Builder.ai serves as a classic example of this issue. Its failure has reignited discussions on the importance of thorough technical evaluations in AI investments.
For many customers, especially startups and small businesses, the sudden closure has forced them to quickly find ways to rebuild or transfer their applications. This situation emphasizes the risks of depending on emerging companies for critical software infrastructure.
Despite this setback, the broader market for low-code and no-code solutions remains strong. Gartner predicts that by 2028, 60% of new enterprise applications will be created using these platforms, with the global market expected to reach $26 billion by the end of this year.
From receiving accolades from Gartner to being ranked by Fast Company and attracting celebrity investors, Builder.ai seemed like a major success story in the AI era.
However, like many companies built on hype, it mistook rapid growth for long-term stability and visibility for actual viability. Ultimately, Builder.ai’s story reflects not just a failed technology but the repercussions of pretending it was ever successful.
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