From Billion-Dollar Dream to National Disgrace: Builder.ai Is India’s Biggest AI Scam

In a dramatic turn of events, Indian AI startup Builder.ai, once valued at $1.5 billion and backed by tech giants like Microsoft and the Qatar Investment Authority (QIA), has entered insolvency proceedings. The company, which had raised over $500 million in funding, is now at the center of what is being dubbed the biggest AI startup scam to date.

The Rise and Fall of Builder.ai

Founded in 2016 by Sachin Dev Duggal and Saurabh Dhoot, Builder.ai promised to revolutionize app development by making it as simple as ordering pizza. The company's AI-powered platform was designed to allow users to build software applications without any coding knowledge. This vision attracted substantial investments, including a $250 million Series D funding round led by QIA in May 2023, bringing the total capital raised to over $450 million.

However, behind the scenes, the reality was starkly different. An internal investigation revealed that Builder.ai's touted AI technology was largely a facade. Instead of automated processes, human developers were manually writing code, undermining the company's core value proposition.

Financial Misconduct and Legal Troubles

The company's financial practices have come under intense scrutiny. Reports indicate that Builder.ai inflated its revenue figures by up to 300%, claiming $220 million in revenue when the actual figure was closer to $55 million.

The situation worsened when creditor Viola Credit, which had lent Builder.ai $50 million in 2023, seized $37 million from the company's accounts. With only $5 million remaining—restricted by government regulations—the company could not meet its payroll obligations. On May 21, 2025, Builder.ai announced it was entering insolvency proceedings, citing "historic challenges and past decisions" that strained its financial position.

Adding to the company's woes, founder Sachin Dev Duggal has been named a suspect in a money laundering investigation in India. Co-founder Saurabh Dhoot faces accusations in a separate loan fraud case.

Investor Fallout and Industry Impact

Builder.ai's collapse has sent shockwaves through the tech investment community. Major investors, including Microsoft and QIA, are now grappling with the fallout from the company's downfall. The incident serves as a cautionary tale about the risks associated with investing in startups that may not have fully transparent operations.

The company's failure also raises questions about the due diligence processes of major investors and the need for more stringent oversight in the rapidly evolving AI sector.

FAQs

Q1: What was Builder.ai's core business model?

A1: Builder.ai aimed to simplify app development through an AI-powered platform, allowing users to create applications without coding knowledge.

Q2: Who were the major investors in Builder.ai?

A2: Key investors included Microsoft, the Qatar Investment Authority, Iconiq Capital, Jungle Ventures, and Insight Partners.

Q3: What led to Builder.ai's collapse?

A3: The company faced insolvency due to financial mismanagement, inflated revenue figures, and the revelation that its AI technology was largely manual.

Q4: What legal issues are the founders facing?

A4: Founder Sachin Dev Duggal is under investigation for money laundering, while co-founder Saurabh Dhoot faces loan fraud allegations.

Q5: How much funding did Builder.ai raise before its collapse?

A5: The company raised over $500 million, including a $250 million Series D round led by QIA.

Q6: What was the role of Viola Credit in the company's downfall?

A6: Viola Credit seized $37 million from Builder.ai's accounts after the company defaulted on a $50 million loan.

Q7: How did Builder.ai's AI technology function in practice?

A7: Despite claims of AI automation, much of the work was done manually by human developers.

Q8: What impact does Builder.ai's collapse have on the AI startup ecosystem?

A8: The incident highlights the importance of transparency and due diligence in AI startups and may lead to increased scrutiny in the sector.

Q9: Are there any plans to revive Builder.ai?

A9: As of now, there are no public plans to revive the company, and it remains in insolvency proceedings.

Q10: What lessons can investors learn from Builder.ai's failure?

A10: Investors should conduct thorough due diligence, especially in startups claiming advanced technological capabilities, to avoid similar pitfalls.

Conclusion

The downfall of Builder.ai underscores the volatility and risks inherent in the tech startup ecosystem, particularly in emerging fields like artificial intelligence. It serves as a stark reminder of the importance of transparency, due diligence, and ethical business practices.

Source: Compiled from reports by the Financial Times, Economic Times, and other reputable news outlets.