I’m deeply saddened to share that Builder.ai – once a $1.3 billion unicorn backed by Microsoft and other investors – has filed for insolvency in the UK.
Builder.ai (formerly Engineer.ai), founded in 2016, promised to let anyone build custom apps “as easy as ordering pizza” using AI. Over the years, it raised ~$450–500M from big-name backers and promised rapid growth. But in May 2025, the company abruptly ran out of cash, entering bankruptcy proceedings – leaving employees and the tech community stunned.
đź“… Timeline of Key Events
- 2016: Founded by Sachin Dev Duggal as Engineer.ai, offering AI-powered no-code app development
- 2019: WSJ reports their “AI” was mostly human developers; firm rebrands to Builder.ai
- 2021–2022: Claims 300% YoY growth; raises Series B & C
- May 2023: Raises $250M Series D from QIA, Microsoft joins as investor; valuation hits ~$1.3B
- Oct 2024: Takes $50M debt facility from Viola Credit based on inflated forecasts
- Early 2025: Revenue restated from $220M → $55M; CEO Duggal steps down
- Mar 2025: Emergency $75M raised; 270 layoffs
- May 2025: Lenders seize $37M of cash. Builder.ai enters UK insolvency
đź’Ł Why It Collapsed
1. Massively Overstated Revenues
Builder.ai’s internal audit slashed its 2023–2024 sales projections by 75%:
- 2024 forecast: $220M → $55M
- 2023 revenue: $180M → $45M
Some insiders claimed previous figures were inflated by 20–300%.
2. Sudden Cash Seizure
Lenders seized $37M out of $42M cash from Builder.ai’s accounts, citing covenant breaches. This left:
- ~$5M in cash (much locked overseas)
- No ability to pay staff or vendors
“Effectively shut down our ability to operate.” – CEO Manpreet Ratia
3. High Burn, Big Debts
Despite raising $500M, cash burned fast:
- Owed $85M to AWS, $30M to Microsoft
- Only $7M left by early 2025
4. Leadership Instability
- Duggal exits in Feb 2025
- Replaced by Manpreet Ratia (ex-Jungle Ventures)
- Investigations raised concerns of “potentially bogus” sales and shady resellers
🔧 The Business Model
Builder.ai offered a no-code/AI app builder, letting users spec out apps that were assembled by AI + human engineers.
- Promised fast, scalable, AI-driven software dev
- Reality: heavily reliant on human devs, despite AI claims
- Once had 1,000+ employees and clients across media, retail, and sports
đź’¸ Funding & Investors
| Round | Year | Lead Investors | Notes |
|---|---|---|---|
| Seed–Series C | 2016–2022 | Lakestar, Jungle Ventures, Insight, WndrCo | ~$195M raised |
| Series D | 2023 | Qatar Investment Authority, Microsoft | $250M round, valuation ~$1.3–1.5B |
| Debt Facility | 2024 | Viola Credit | $50M loan (later triggered collapse) |
| Emergency Raise | 2025 | Existing investors | $75M in Mar 2025 to fix finances |
đź“Ł Company & Industry Reactions
🔹 Builder.ai Statement
“Despite the tireless efforts of our team… the business has been unable to recover from historic challenges and past decisions.”
– Company LinkedIn Post
🔹 CEO Manpreet Ratia
“Lenders swept $40M from our accounts… shutting down our ability to operate.”
“We’re working with administrators to protect customers, employees, and any remaining value.”
🔹 Analysts
- Phil Brunkard (Info-Tech): AI startups are hitting a “realism check” post-hype
- Carrie Osman: A case of “FOMO investing” chasing flashy AI narratives without substance
🧠Lessons for Startups
1. Be Realistic & Transparent
- Don’t overinflate forecasts
- Unrealistic growth projections undermine trust
2. Sustainability Over Speed
- Growth is great, but runway and cash flow are vital
- Builder.ai burned fast and owed massive cloud bills
3. Hype ≠Product
- No-code/AI is promising, but needs solid execution
- Don’t build a story that outpaces your capabilities
4. Take Care of People
- Employees faced sudden job losses with little warning
- Transparency and support during collapse matter
5. There May Still Be Value
- Some tech and talent may be acquired
- Duggal may even attempt to buy back parts of the company
đź’¬ Final Thoughts
This is a painful reminder that even unicorns can fall – and quickly.
Builder.ai’s story is one of ambition, hype, missteps, and hard lessons. It shows us that AI buzzwords and big funding don’t replace business fundamentals. Let’s learn from this and support the people affected.
The no-code/AI space still holds promise – but it must be built on trust, transparency, and real value.
Sources: Bloomberg, TechCrunch, WSJ, LinkedIn posts from Builder.ai leadership.
Top comments (0)