Builder.ai, a UK-based AI software startup once hailed as a revolutionary force in web and app development, has collapsed into insolvency following revelations of drastically overstated revenues and investor misjudgement. The company, which promised to make app-building “as easy as ordering pizza,” informed employees this week that it will enter insolvency proceedings after lenders called […]
Builder.ai, a UK-based AI software startup once hailed as a revolutionary force in web and app development, has collapsed into insolvency following revelations of drastically overstated revenues and investor misjudgement.
The company, which promised to make app-building “as easy as ordering pizza,” informed employees this week that it will enter insolvency proceedings after lenders called a default, according to the Financial Times. Backed by Microsoft and Qatar’s sovereign wealth fund, Builder.ai raised more than $500 million in funding.
An internal investigation reportedly revealed that Builder.ai’s revenues had been inflated by as much as 300%. Audited figures slashed 2024 revenue estimates from $220 million to just $55 million, with 2023 revenues similarly restated from $180 million to $45 million.
Founder Sachin Dev Duggal and chief revenue officer Varghese Cherian both stepped down earlier this year, shortly before the investigation began. The company’s board later engaged a law firm to probe concerns over unpaid bills and suspicious accounting practices.
Findings suggested there may have been a deliberate effort to misrepresent sales.
Carrie Osman, CEO of private equity advisor Cruxy, says Builder.ai’s downfall is emblematic of a wider trend of impulsive investment driven by hype rather than hard evidence.
“This is just the latest example of FOMO investing,” Osman said. “Technology like GenAI has been massively overhyped and investors are under pressure to back the next big thing—often without sufficient scrutiny.
“In Builder.ai’s case, the tech and sales numbers were hugely exaggerated. This should have been obvious to anyone who looked properly.”
Carrie Osman, Cruxy founder and CEO
Osman criticises what she sees as a shallow approach to due diligence, saying investors often fail to interrogate customer contracts or pricing structures.
“This wasn’t just a misunderstanding of the tech—it was a failure to understand the commercial reality. Microsoft and others didn’t dig below the headlines and hype. We’ve seen this playbook before—Zymergen, Frank, Theranos—and unless investors wise up, we’ll see it again.”
