Builder.ai, a Microsoft-backed startup valued at $1.5 billion, has entered insolvency proceedings after auditors discovered inflated sales figures. The AI app development platform raised over $445 million from investors but saw its finances crumble when revenue projections dropped 25% for late 2024. CEO Manpreet Ratia announced the bankruptcy during an employee call. The company’s collapse raises important questions about AI coding platforms and low-code solutions.
After raising over $445 million from major investors including Microsoft, Builder.ai has entered insolvency proceedings as its valuation collapsed from its peak of $1.5 billion. The London-based company, which created a platform for building apps and websites, announced its bankruptcy during a May 20 employee call led by CEO Manpreet Ratia.
The company’s troubles began surfacing when Bloomberg reported that sales figures were inflated by more than 20%. This revelation led to a 25% reduction in projected revenue for the second half of 2024. The firm had previously claimed 300% revenue growth leading up to 2022.
Builder.ai’s history includes earlier controversy. In 2019, the Wall Street Journal revealed that the company, then known as Engineer.ai, relied heavily on human engineers despite marketing itself as an AI-driven platform. This led to a rebranding effort and increased transparency about human involvement in their operations. The company’s failure to implement proper data-driven decision making contributed to its downfall. Auditors discovered concerning discrepancies while conducting a thorough financial review of the company’s books.
Despite these setbacks, the company continued to attract major investment. In March 2022, Insight Partners led a $100 million Series C round, followed by a $250 million Series D round in May 2023 led by Qatar Investment Authority. The platform expanded into Southeast Asia and Middle East markets and integrated with Microsoft’s cloud and AI ecosystem. By early 2025, the company’s financial situation became dire as cash reserves dropped to about $7 million.
Recent leadership changes saw founder Sachin Dev Duggal step down, with Ratia taking over as CEO in February 2025. However, mounting operational expenses and reduced revenue quickly led to financial strain. The company is now working with administrators to explore business options while focusing on supporting employees, customers, and partners through the insolvency process.
The collapse of Builder.ai raises questions about the viability of AI coding platforms and investment in low-code solutions. The company’s downfall affects not only its immediate stakeholders but also impacts trust in the broader AI development platform market.
The appointment of administrators marks the end of a once-promising venture that attracted support from blue-chip investors and aimed to revolutionize app development through AI technology.
Conclusion
Builder.ai’s downfall highlights a concerning trend in AI startups, where 82% of companies claiming to use AI don’t actually deploy it meaningfully in their products. The company’s valuation drop from $1.75 billion to under $250 million serves as a stark reminder that artificial intelligence claims require verification. This episode reinforces the importance of transparency in tech company operations and valuations.
