Subpoenas issued after Builder.ai declares insolvency
Some current and former staffers at Builder.ai, a once-promising AI start-up, have been issued subpoenas from the US Attorney's office in Manhattan days after the company declared insolvency.
A former high-level employee at the Microsoft-backed company confirmed that, on the advice of counsel, some employees have been asked to preserve documents and other evidence related to a potential criminal investigation.
'They're looking into inflated sales numbers and round tripping,' a former staffer said, referring to a method for evading taxes. Regardless of whether or not the investigations lead to any litigation or prosecutions, the London-based Builder.ai's days as a high-flying start-up are done.
'They're entering insolvency and every jurisdiction is different, so all of our end dates are all different, but the company is essentially done,' the former employee said. The US Attorney's office in Manhattan declined The National's requests for comment.
It's a precipitous fall for a company that once achieved unicorn status, receiving a valuation of more than $1 billion. Another former employee spoke to The National last week to raise concerns about Builder.ai.
'Founder Sachin Dev Duggal, who has since moved to Dubai, has also been a prominent speaker at many conferences across the region, contributing thought leadership to the tech and business community,' the former employee said in an email.
Mr Duggal was removed as chief executive in March, though he retained an association with the company, along with the title of 'chief wizard'. In 2024, when Builder.ai was flush with investor cash and in the tech world's good graces, Mr Duggal briefly spoke to The National as he appeared at an event hosted by the Dubai Multi Commodities Centre, which had just announced a new AI centre.
'With this centre, we're helping to unveil a portal to global commerce,' he said at the time, reflecting on why Builder.ai chose DMCC as an ecosystem partner.
'We didn't want to be a software company just surrounded by other software companies, we wanted to be surrounded by potential customers and peers,' Mr Duggal added, referring to DMCC's reach and partnerships with gold, diamond, tea, coffee, crypto and gaming entities, to name a few.
According to employees and media reports, Builder.ai failed to meet revenue expectations. It had promised to make mobile app development as 'easy as buying a pizza' but struggled to create reliable products, disappointing investors and creating a chasm between expectations and financial reality.
Mr Duggal requested additional investment funds, as well as an emergency loan months before he was stripped of the chief executive title. Audits later revealed a high likelihood that sales projections had been fudged, causing concern about other potential financial irregularities.
Builder.ai's LinkedIn page, which has 288,000 followers, turned off the comment section for a post announcing the company's insolvency proceedings.
'Despite the tireless efforts of our current team and exploring every possible option, the business has been unable to recover from historic challenges and past decisions that placed significant strain on its financial position,' the post reads. 'We will work closely with the appointed administrators to ensure an orderly process and to explore all available options for parts of the business, where possible.'
The company has become a cautionary tale of high-flying AI expectations meeting the realities of a competitive and crowded tech market. It's unclear if there will be any surviving pieces of intellectual property that might help Builder.ai survive in a different guise.
Mr Duggal, whose confidence and bold projections helped to put Builder.ai on the map, did not immediately respond to The National's requests for comment. He did, however, post some thoughts on a Builder.ai alumni LinkedIn group.
'I don't think the story is done yet, but irrespective if I can be of any help to any of you as you make this transition in life please know I'm only a message away,' he posted in part. 'And more importantly – if I didn't listen, if I was short, if I was unreasonable – I'm sorry.'
In the UAE, the DMCC, with which Builder.ai had an 'ecosystem partnership', said it was evaluating developments. The company has its headquarters in London and has offices in locations including New York and Dubai.
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