Once worth over $1.3 billion, AI start-up Builder.ai filing for bankruptcy
Builder.ai's stunning fall from grace show the risks inherent in the rush to back promising AI start-ups. PHOTO: BUILDER.AI/FACEBOOK
LONDON – Builder.ai, the British artificial intelligence start-up backed by Microsoft and the Qatar Investment Authority (QIA), is filing for bankruptcy after its chief executive officer said a major creditor had seized most of its cash.
Builder.ai is also backed by Singapore-based venture capital investor Jungle Ventures, according to other media reports.
Viola Credit, which provided US$50 million (S$65 million) in debt to the software firm in 2024, has seized US$37 million from Builder.ai's accounts, leaving the company with US$5 million, Builder.ai CEO Manpreet Ratia said in an interview on May 21, without giving a clear reason for the seizure. Viola didn't immediately respond to a request for comment left after business hours.
The company, which operates in five jurisdictions – the UK, the US, India, the United Arab Emirates and Singapore – will file for bankruptcy in due course, following each region's process, Mr Ratia said.
With the start-up short on cash, Mr Ratia said he'd made the difficult decision to let go of most of Builder.ai's employees. The company's remaining US$5 million is located in Indian accounts and couldn't be used to pay workers due to restrictions on the movement of money out of the country, he said.
The proceedings mark a stunning fall from grace for a company that two years ago raised a US$250 million funding round led by QIA, one of the world's biggest sovereign wealth funds. It achieved a valuation of over US$1 billion (S$1.3 billion), earning it 'unicorn' status.
Microsoft also made an equity investment in 2023 as part of a strategic partnership. Less than two months ago, Builder.ai confirmed to Bloomberg News that it had been forced to lower sales estimates provided to investors and had hired auditors to examine two years of accounts. This came in response to questions from Bloomberg about former employees' concerns that the company inflated sales figures.
Builder.ai's missteps show the risks inherent in the rush to back promising AI start-ups, as investors seek to replicate the success of heavyweights such as OpenAI and Anthropic. After the debut of ChatGPT, London-based Builder.ai rode investor enthusiasm for AI to attract big-name investors.
The firm's founder, Sachin Dev Duggal, stepped down as CEO in February and was replaced by Mr Ratia. At the time, Builder.ai also cut its board to five seats from nine, and asked Mr Duggal to relinquish four of the five seats he controlled.
'The business has been unable to recover from historic challenges and past decisions that placed significant strain on its financial position,' Builder.ai said in a statement on May 20. The firm will appoint an administrator to manage the company's affairs, it added.
Microsoft and QIA didn't respond to requests for comment.
The World Bank Group's International Finance Corp., Hollywood mogul Jeffrey Katzenberg's WndrCo, Lakestar and SoftBank Group's DeepCore incubator have also invested in the company.
Established in 2016, Builder.ai offers a platform for businesses to create custom smartphone apps while requiring little or no coding, allowing a faster turnaround than traditional outsourcing of software projects. BLOOMBERG
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