Microsoft-backed Builder.ai bankrupt after ‘AI' powered by 700 Indian engineers
A London-based artificial intelligence company valued at $1.5 billion has filed for bankruptcy after it was revealed that its much-touted 'neural network' was actually a workforce of more than 700 engineers based in India.
Builder.ai, backed by a reported $455 million investment from Microsoft, had claimed that its AI app-building service, 'Natasha', could design and code applications autonomously and at unprecedented speed.
However, investigations showed that most of the work was carried out by human engineers, not artificial intelligence.
Further scrutiny by Bloomberg uncovered that Builder.ai engaged in questionable financial practices with VerSe, an Indian social media startup.
Employees revealed that while some clerical tasks were assisted by general software, the bulk of coding and app development was performed manually.
This practice, which went on for eight years, came to light in May 2025, triggering a rapid collapse of the company.
In a LinkedIn statement, Builder.ai announced it would be 'entering into insolvency proceedings,' citing historic challenges and past decisions that severely impacted its financial standing.
'Despite the tireless efforts of our current team and exploring every possible option, the business has been unable to recover,' the company said.
The two companies reportedly exchanged inflated invoices to artificially boost sales figures between 2021 and 2024. VerSe has denied the allegations, with co-founder Umang Bedi describing the claims as 'baseless and false.'
The fallout from Builder.ai's exposure has sparked discussions about transparency and accountability in the AI industry, particularly as investors continue to pour funds into language models and automation technologies.
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