The collapse of the AI unicorn Builder behind it is a shocking scam where Indian programmers impersonated AI.
Builder.ai, this unicorn that boasts of being the &#34;AI development tool,&#34; was once valued at $1.5 billion and secured over $450 million in financing from Microsoft, SoftBank, and the Qatar Investment Authority, but collapsed in May 2025.
From the dazzling slogan &#34;Building apps with AI is as easy as ordering pizza&#34; to the awkward truth that it was all manual operations by Indian engineers, and the financial black hole of inflated revenues and forged contracts, this eight-year-long scam left investors with nothing and sounded a harsh alarm for the market amidst the AI boom.
<h2>Mythical Beginning: From &#34;As Easy as Ordering Pizza&#34; to AI Unicorn</h2>
The story of Builder.ai began in 2016, created by founder Sachin Dev Duggal.
This Indian entrepreneur, whose resume comes with a mythical filter, assembled computers at 14, developed an arbitrage system for Deutsche Bank at 17, and founded a startup valued at $100 million at 21.
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In 2016, he founded Engineer.ai (later renamed Builder.ai), promising to help businesses build applications with AI, simplifying complex software development into an experience &#34;as easy as ordering pizza.&#34;
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In an era when AI had not yet been commercialized and the No-Code track was just emerging, this concept directly ignited the investment circle.
From the Indian venture capital scene to Silicon Valley, Builder.ai quickly became the darling of &#34;No-Code + AI,&#34; with a high-paced financing rhythm.
The lineup of investors was also luxurious, including Microsoft, SoftBank, the Qatar Investment Authority, Insight Partners, etc., with the company's valuation soaring to $1.3-1.5 billion at one point. Microsoft even announced a strategic partnership in 2023 to integrate its platform into Azure cloud services.
Microsoft Vice President Jon Tinter once commented on Builder.ai:
<blockquote>
&#34;We believe Builder.ai is creating a whole new category that empowers everyone to become a developer.&#34;
</blockquote>
<h2>The &#34;Coder Outsourcing Factory&#34; Under the AI Facade</h2>
But behind the glamour, a crisis had long been lurking.
In 2019, The Wall Street Journal revealed that Builder.ai's &#34;AI&#34; was merely a marketing gimmick, with a large amount of work being done manually by Indian engineers—&#34;it's all human, no intelligence.&#34;
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Unfortunately, the investors' FOMO (fear of missing out) mentality overshadowed rational due diligence, allowing this &#34;unicorn&#34; to continue its wild run.
As the core selling point of Builder.ai, its AI project manager &#34;Natasha&#34; claims to automatically understand requirements, generate code, and allocate resources, making it a &#34;never-working CTO + engineering team.&#34;
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However, according to multiple former employees, the so-called Natasha is actually just a front-end chat interface, connected to hundreds of low-paid outsourced engineers in Hyderabad, India.
These engineers work according to templates, manually piecing together and integrating code bit by bit, with &#34;AI&#34; merely serving as a mask for them.
One former employee bluntly stated:
<blockquote>
&#34;This company is essentially a fraud enterprise using an 'AI domain.' They hire a large number of low-cost developers to 'pretend to be AI.'&#34;
</blockquote>
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<h2>Financial Fraud, Inflated Sales Data, Founder Flees Rapidly</h2>
If technological fraud is the original sin of Builder.ai, financial fraud is the last straw that broke its back.
In 2024, the company projected external revenue of $220 million, attempting to drive a new round of financing. However, internal audits revealed that actual revenue was only $55 million, less than a quarter of the forecast.
Bloomberg reported that Builder.ai exaggerated its projected sales for 2024 by 300% to creditors, leading major creditors to freeze funds. It is reported that U.S. prosecutors have issued subpoenas to the company, requesting financial statements, accounting policies, and client lists.
Worse still, Builder.ai and the Indian social media company VerSe Innovation have artificially inflated sales data for years through &#34;round-tripping.&#34;
Reports reveal that these two companies issued invoices to each other to inflate revenue without actually delivering products or services. According to insiders, Builder.ai received nearly $60 million in revenue from VerSe for app development services while also paying similar amounts in marketing fees to VerSe and its subsidiaries.
It is reported that U.S. prosecutors have issued subpoenas to Builder.ai, requesting financial statements and client lists to investigate its systematic financial fraud.
Ironically, in early 2025, Sachin Dev Duggal resigned as CEO, self-styling as &#34;Chief Wizard,&#34; attempting to leave an escape route for the impending crisis.
After the new CEO Manpreet Ratia took office, he discovered that the company's account was frozen by creditor Viola Credit for $37 million, leaving only $5 million available but restricted, making it impossible to pay salaries.
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On May 20, Builder.ai was forced to file for bankruptcy in five locations: the UK, the US, India, Singapore, and the UAE, freezing global projects, with employees demanding wages and investors seeking accountability. The company's official website is currently inaccessible, leaving only two contact emails.
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In an internal email, new CEO Ratia wrote:
<blockquote>
&#34;With no viable alternatives, the board made the extremely difficult decision to enter bankruptcy proceedings.&#34;
</blockquote>
<h2>Beneath the Bubble, What Remains of Trust?</h2>
The collapse of Builder.ai has dealt a devastating blow to investors.
As a strategic partner, Microsoft not only invested funds but also integrated it into its cloud services, now facing a $300,000 debt recovery; the $250 million Series D financing led by the Qatar Investment Authority is nearly a total loss; and a host of institutional investors like SoftBank and IFC are also deeply mired in trouble.
What is even more lamentable is that Sachin Dev Duggal, like Microsoft CEO Satya Nadella, is also an Indian entrepreneur, truly staging a &#34;hometown person deceiving a hometown person&#34; scenario for the latter.
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In fact, the collapse of Builder.ai is just the tip of the iceberg of the &#34;AI washing&#34; phenomenon. Similar cases are emerging one after another:
<blockquote>
Nate: Claims to be an AI automatic purchasing assistant, but actually employs workers from a Philippine call center to operate manually;
Joonko: Promotes having an AI recruitment matching system, but the client list is largely fabricated;
Evolv: Claims its AI security system can accurately identify weapons, but frequently misidentifies items, mistaking water bottles for weapons.
</blockquote>
This phenomenon exists because investment is generally driven by FOMO psychology, believing that not investing could mean missing out on the next OpenAI, leading them to simplify due diligence processes, tolerate contractual risks, and ultimately be blinded by the &#34;AI narrative.&#34;
Gartner predicts that the No-Code market will account for 60% of enterprise application development by 2028, reaching a scale of $26 billion. It is foreseeable that behind the prosperity, risks similar to &#34;AI washing&#34; will be ubiquitous
The &#34;prodigy&#34; Duggal, who started his career at the age of 14, built a $1.5 billion castle in the air using the alluring label of &#34;AI&#34; and the marketing slogan &#34;as simple as ordering a pizza.&#34;
This castle ultimately collapsed, not because AI is unreliable, but because it never truly possessed AI.
The lesson from Builder.ai reveals that the bursting of a bubble is not frightening; what is frightening is that the market continues to indulge in &#34;the next big story&#34; while forgetting the essence of technology

MSFT

How did an eight-year-long "technology myth" deceive the world's top capital?

- Builder.ai, once valued at $1.5 billion and touted as an "AI development tool," collapsed in May 2025 due to a massive fraud scheme involving manual labor disguised as AI.  
- The company misrepresented its revenue and engaged in financial fraud, leading to bankruptcy filings across multiple countries and significant losses for investors, including Microsoft and Qatar Investment Authority.  
- This incident highlights the risks of "AI washing" in the tech industry, where companies exploit the allure of AI to attract investment without delivering genuine technological innovation.

Wallstreetcn

Microsoft

OpenAI

Deutsche Bank AG

"Indian telecom fraud" is outrageous! For a full eight years, AI relied entirely on people, and income depended solely on brushing. Microsoft's Nadella was "pig butched" by his fellow townsman