British AI start-up embroiled in sex assault claims after going bust

Telegraph

4 hours ago

The acrimonious collapse of one of Britain's most feted AI start-ups came after it faced allegations that a senior executive sexually assaulted a former member of staff, The Telegraph can reveal.
The alleged assault took place at a hotel in India in 2022 and was reported to the police at the time. A board member alerted management to the claims, which were also the subject of a public petition to remove the executive.
The Telegraph is aware of the identities of the alleged perpetrator and victim but cannot name them for legal reasons.
The alleged assault was said to have taken place when the executive was on holiday and not on company business. The individual has since left the company.
However, The Telegraph understands the incident remains the subject of ongoing legal proceedings in India against the police for alleged failure to investigate the complaint properly.
A police filing reported in Indian media at the time, which did not name Builder AI, alleged the victim was forced to take a pill at 3am after meeting the executive in a hotel bar, and was later seriously assaulted in a hotel room.
The alleged victim told her sister and friends, who urged her to take the incident to the police.
It is understood the executive denied any wrongdoing.
Builder AI commissioned an internal investigation into the matter, led by the company's general counsel.
Sachin Dev Duggal, Builder AI's ousted chief and founder, is said to have recused himself from the investigation and received the final report. There is no suggestion of wrongdoing by Mr Duggal.
Despite the investigation, Manpreet Ratia, Builder AI's new chief executive, this weekend insisted the full board and wider executive team at Builder AI had not been informed of the matter.
Builder AI said: 'The matter was first raised with the company by an individual board member, acting in their personal capacity.
'Based on internal emails reviewed to date, it appears that Sachin Duggal recused himself from involvement in the matter.
'The company has been informed that a report was submitted by the general counsel to Sachin Duggal and the individual board member, concluding that no further action was warranted. This report was not shared with the broader board or the executive leadership.
'For avoidance of doubt, the full board of directors and the executive team were not made aware of this matter at the time it arose.'
The statement added the wider board was first made aware of the claims after being contacted by The Telegraph, and that the investigation had not been overseen or directed by the board.
The sexual assault claims at Builder AI, which have not previously been reported, come days after the business filed for bankruptcy in the US amid reports that inflated sales precipitated its dramatic collapse.
Builder AI's lenders pulled support from the business earlier in May after forecast sales failed to materialise and came in far below expectations. Predicted sales of $220m (£163m) came in at closer to $50m.
The company has been served with subpoenas by US prosecutors in New York, who have asked for information on its financial reporting and accounting, The Telegraph understands.
Mr Duggal, Builder AI's founder and 'chief wizard', launched the business in 2016 with the aim of making building an app as 'easy as ordering a pizza'.
The company offered what it called 'human-assisted AI', using a chatbot called Natasha and human contractors to quickly and cheaply build apps.
The company raised $250m from investors, including Microsoft and venture capital investors Jungle Ventures and Insight Partners, who bought into Mr Duggal's vision.
However, Mr Duggal was ousted in February after the board found that the company's revenues for 2024 were far lower than had been forecast.
The events ultimately led lenders to pull $40m from the company's accounts in May, according to a letter to investors, forcing the UK-headquartered start-up to file for bankruptcy in the US.
Last week, the Financial Times reported Builder AI was suspected by former employees to have engaged in multiple methods to boost revenues, including alleged circular transactions and deals with resellers that took years to pay up.
A source familiar with the company's finances, however, denied this, and insisted its revenues were always reported properly, transparent and said that business with partners was legitimate.
Builder AI collapsed with liabilities of up to $100m, bankruptcy filings show. According to the note to investors, the company owed more than $88m to cloud providers, such as Amazon.
The start-up had been widely hailed as UK AI champion. Mr Duggal was named an EY World Entrepreneur of the Year in 2024. Its failure, and the sexual assault allegations, threaten to cast a shadow over Britain's AI ambitions.