Builder.ai, led by Sachin Dev Duggal, faces the first notable collapse amid the AI expansion boom
Builder.ai's Collapse: A Cautionary Tale in AI Investments
Builder.ai, once hailed as one of Europe's biggest and most promising AI unicorns, has collapsed into bankruptcy. The downfall was triggered by a series of financial misconduct and deceptive practices, as revealed by investigations [1][2].
Founded by Sachin Dev Duggal, who self-proclaimed himself as the "chief wizard" of the company, Builder.ai raised more than half a billion dollars from high-profile investors such as Microsoft and Qatar's sovereign wealth fund. The pitch was that Builder.ai could make building apps as easy as ordering pizza, thanks to its ground-breaking AI platform [1].
However, it was later uncovered that the AI platform was an all-too-human operation, relying on a group of Indian developers pretending to be bots writing code. Furthermore, the reported revenues had "gaps" between them and actual revenues, with the company booking $142 million in unpaid sales and $107 million from customers who made only minimal deposits, inflating revenue by about 300% [2].
Debt was mounting for Builder.ai, and the scheme involving "round-tripping" sales with an Indian startup to exaggerate revenue and secure emergency loans was finally exposed. This led a major lender to seize nearly all of Builder.ai’s cash, pushing the startup into bankruptcy [1][2].
The investigation into Builder.ai’s collapse has focused on these financial irregularities and deceptive practices. While specifics on ongoing legal or regulatory actions against Sachin Dev Duggal personally are not detailed in the available sources, the audit committee’s findings were critical in exposing the scheme [1][2].
The collapse of Builder.ai serves as a cautionary tale about hype-driven AI investments lacking transparency and ethical oversight. It underscores the need for trust, transparency, and ethical development in the AI industry [1][2].
Despite the controversy, Duggal is actively fundraising for a new venture to help others navigate the world of start-ups and AI. However, his past actions, including his ousting from his first venture, cloud-computing firm Nivio, in 2013, and the allegations of overstating the firm's technical abilities, using two sets of books, and making transfers to his private accounts, continue to raise questions [1].
In 2016, Duggal launched Engineer.ai, which was later rebranded to Builder.ai in 2019. His next venture, a photo-sharing app called Shoto, was short-lived. Duggal and his family moved to Dubai last summer [1].
The parties involved in the dispute settled the matter, but it prompted the rebrand from Engineer.ai to Builder.ai in 2019. Duggal claims that Nivio was worth $100 million when he exited, but he was actually removed by the board [1].
As of mid-2025, no current detailed information explicitly describes the legal status or criminal investigations against Duggal beyond the financial audit and bankruptcy proceedings. The fallout from Builder.ai’s collapse continues to leave a trail of creditors and top tech investors reeling.
[1] The Guardian. (2025). Builder.ai: The AI start-up that collapsed into bankruptcy. [online] Available at: https://www.theguardian.com/technology/2025/jun/01/builder-ai-the-ai-start-up-that-collapsed-into-bankruptcy
[2] The Financial Times. (2025). Builder.ai: The AI start-up's collapse reveals financial irregularities. [online] Available at: https://www.ft.com/content/34567520-7d7f-4549-8f3d-87584103c195
- In light of the collapse of Builder.ai, a personal finance newsletter could highlight the importance of transparency and ethical practices in AI businesses and finance.
- The fall of Builder.ai, a once-promising AI startup, serves as a reminder for investors to be cautious about hyped AI investments and to conduct thorough due diligence in the realm of technology and business.
- Despite the controversy surrounding his past ventures, Sachin Dev Duggal, the founder of Builder.ai, plans to launch a new venture focusing on start-ups and AI, underscoring the need for closer scrutiny and ethical oversight in the industry.
