Latest news with #Duggal
Yahoo
2 days ago
- Business
- Yahoo
The controversial collapse of a £1bn British AI dream
'It is not the critic who counts,' Sachin Dev Duggal posted on Instagram days after he was pushed out as chief executive of Builder AI. 'The credit belongs to the man who is actually in the arena … who, if he fails, at least fails while daring greatly.' Just weeks after Duggal posted this famous Teddy Roosevelt quote, Builder AI would indeed fail – and in spectacular fashion. On May 20, the London start-up confirmed that it would be appointing administrators with the loss of about 1,000 jobs. The collapse came despite Duggal, a colourful technology entrepreneur who went by the title of 'chief wizard', raising more than $450m (£334m) in funding from investors including Microsoft, Qatar's sovereign wealth fund, and venture capital investors such as Insight Partners. Builder AI had claimed to use 'human-assisted AI', including a bot called 'Natasha', to quickly and cost-effectively build apps for customers, including the BBC. Duggal, who has said he started building PCs at home at the age of 14, said the company would make building an app as easy as ordering a pizza. This vision helped Builder AI catapult to a valuation of $1.5bn, making it one of Britain's rare 'unicorns' – a private tech company worth more than a billion. Not only that, it was also operating in the field of AI, a technology Sir Keir Starmer has promised will 'deliver a decade of national renewal'. Now, administration appears all but certain, although advisers have yet to be formally appointed. Manpreet Ratia, who was parachuted in by investors to try and save the business, told staff earlier in May that he had been left running the company with 'zero dollars', according to the Financial Times. In a letter to investors seen by The Telegraph, Ratia blamed the sudden collapse on the 'unexpected and irreversible action' of the company's senior lenders who 'swept over $40m in cash from our accounts, and restricted all access to funds, effectively shutting down our ability to operate'. According to Bloomberg, the company's lenders pulled funds after Builder AI's promised sales figures came in far below expectations. Before his exit the 42-year-old Duggal gave lenders a sales forecast in the region of $220m for 2024. After an independent audit, the actual figure came in at $50m. Builder AI was also forced to restate its sales for 2023 after previously booked sales from resellers of its technology were not collected for long periods. The Financial Times reported Builder AI commissioned a law firm to investigate the figures and experts involved in the review told Ratia that they believed there may have been past efforts to inflate sales, it was reported. In the letter from Ratia to investors, he revealed that Builder AI had borrowed $50m last year and owed $88m in cloud fees to businesses such as Amazon. A $75m capital infusion by existing investors in March was not enough to stave off collapse. Despite its lofty valuation, the company had been grappling with a series of crises for years. One source says: 'Where did it go wrong? Everywhere.' Builder AI was founded in 2016 by Duggal, an Imperial College graduate who worked at Deutsche Bank before founding Nivio, a cloud computing business that he later sold. From the outset, the company caught the attention of the wider business world. Duggal was named an EY World Entrepreneur of the Year in 2024 and, that same year, he hosted the rapper at the 'BuilderPlex' event in Davos for the World Economic Forum. Yet as early as 2019, problems had begun to emerge. Builder AI and Duggal were sued by Robert Holdheim, a former employee, for $5m that year. Holdheim alleged he was dismissed after complaining that the company's technology at the time 'did not work as promoted and was essentially nothing more than 'smoke and mirrors''. At the heart of the allegation was a claim that Builder AI was far more reliant on humans than it let on. Holdheim claimed the company told investors apps were '80pc' built by a product it had 'barely even begun to develop'. Instead, it relied heavily on contractors in India, according to court filings. Builder AI disputed the allegations and the lawsuit was later settled. Duggal always insisted the company had been upfront that its AI was 'human-assisted'. Investors would later say that this combination of automation and human-helpers allowed apps to be built 'multitudes cheaper and faster' than traditional approaches. At a 2020 conference, Duggal said that 'AI doesn't mean Another Indian', adding 'how you translate a company's mission and where it is today to the company's aspirations are two very different things'. Later, the start-up would sue Barry Kaufman, the lawyer that had brought the claims, alleging the case had been the basis of a damaging newspaper article that had cost the business $1.2bn in an investment round. The claim was ultimately dismissed. In a further lawsuit, filed this year, the lawyer accused Builder AI of using legal strong-arming to 'intimidate' its critics and 'silence' them. Duggal, meanwhile, is involved in his own legal battles. Court records in India show that he was issued with a 'non-bailable warrant' and a demand that he come in for questioning in a case related to the collapse of Indian business Videocon, which has been the subject of a high-profile loan fraud investigation. Lawyers for Duggal have said the warrant was 'bad in law' and is 'strongly refuted'. His lawyers have insisted he is a witness in the case. The case is ongoing. Saurabh Dhoot, another Builder AI co-founder, was in 2023 named on a charge sheet brought by Indian prosecutors alleging a 'criminal conspiracy' at Videocon, which was founded by Dhoot's one-time billionaire uncle. Dhoot has not been involved with Builder AI since 2022 and has denied wrongdoing in the case. Lawyers for the Dhoot family were contacted for comment. Duggal stepped down as chief executive of Builder AI in February after the board became concerned that its projected sales for 2024 were way off the mark. The apparent accounting discrepancies that occurred under Duggal's leadership have come under legal scrutiny in recent weeks. In the days before it said it would file for administration, Builder AI received requests from US prosecutors in New York for information about its sales data, The Telegraph understands. A 'fake it till you make it' approach has long been an accepted part of the tech world, with founders and start-ups setting out ambitious visions for their products and performance as they hope to woo both investors and staff. However, investors and lenders have become less tolerant of companies that fall short as interest rates rise and following a series of high-profile failures. Still, Builder AI's dramatic end came as a shock to staff and shareholders. Investors had just injected 'rescue funding' of $75m to try and shore up the business, an effort that was quickly undone as lenders pulled support. The Telegraph also understands that Duggal agreed a $300,000 personal loan with Builder AI's chief executive, Ratia, to help meet payroll costs. The failure of Builder AI threatens to cast a shadow over the UK's AI sector at a time when Britain's start-ups are struggling to compete with their Silicon Valley peers. According to data from Dealroom, UK AI start-ups have raised about $3.1bn for the latest wave of 'generative' AI tools since 2019. US start-ups, meanwhile, have raised $84bn. Since his exit, Duggal has not been quiet. The Builder AI founder has been on panels in Dubai, where he is now based, talking up the Middle East's AI prospects on LinkedIn. Sources said he has been working independently to try and raise funds to save Builder AI or buy it out of insolvency. Duggal and his lawyers declined to comment. The founder did, however, post a note on a group for ex-Builder AI employees, many of whom have just lost their jobs. 'I know this week has been devastating for everyone,' Duggal wrote. 'Not a day goes by since I stepped away that I don't miss the builder energy.' Cryptically, the 'chief wizard', added: 'I don't think the story is done yet.' Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
6 days ago
- Business
- Yahoo
A Billion Dollar AI Startup Just Collapsed Spectacularly
As the artificial intelligence industry struggles with ever-rising costs — not to mention a steady uptick in hallucinations — investors are getting impatient. One investment firm went as far as seizing $37 million from accounts owned by a UK-based AI startup meant to make developing apps "as easy as ordering a pizza." That left the company with just $5 million, according to Bloomberg, prompting its senior lenders to place it into default. With very little cash left to keep the ship afloat, CEO Manpreet Ratia closed the startup's doors and filed for bankruptcy. was previously one of the most well-funded tech startups in the game, with over $450 million in backing from sources as big as tech giant Microsoft, Japanese investment firm SoftBank, and the Qatari government's sovereign wealth fund. That gave it a valuation worth over $1 billion, drawing comparisons to Mark Zuckerberg's Meta. Ratia told the Financial Times the startup was "unable to recover from historic challenges and past decisions that placed significant strain on its financial position," adding that he had been running the business with "zero dollars" in its US and UK accounts. The CEO took over for founder and "chief wizard" Sachin Dev Duggal in March, after the latter saddled the business with hundreds of millions worth of debt while burning through its dwindling cash fund, according to FT. Duggal was likewise embattled in a high-stakes legal probe by authorities in India, who named him a suspect in an alleged money laundering case. For his part, Duggal denied the accusations, saying he was simply a witness, though FT has also reported Duggal heavily relied on the services of an auditor with whom he has close personal ties. It's not known what, exactly, pushed the first domino. Viola Credit, the company that seized coffers, has yet to give an explanation, though we can probably guess they saw the writing on the wall and simply hoped to pad their losses. It's a big moment for the AI industry, as the pressure grows for AI companies to actually come out with a usable — not to mention sustainable — product. Though AI companies accounted for 40 percent of the money raised by US startups last year, the vast majority of them have yet to turn a profit. Many AI startups struggle to find any consistent revenue stream at all beyond tech-crazed venture capitalists, and a not insignificant number have been caught misleading investors about their AI's capabilities to keep the cash flowing. Case in point, after Ratia took the helm back in March, lowered its revenue estimates for the last half of 2024 by 25 percent — a major blow for the much-hyped company. The startup was likewise caught trying to pass off human-built software as AI back in 2019. As auditors and journalists sift through the rubble to find out what went wrong, now makes as good a time as any to take a temperature check on unchecked AI hype. More on AI startups: Company Regrets Replacing All Those Pesky Human Workers With AI, Just Wants Its Humans Back
Yahoo
26-05-2025
- Business
- Yahoo
US Prosecutors Sought Builder.ai Data After Sales Overstated
(Bloomberg) -- US prosecutors demanded that hand over financial statements and other documents, signaling that the artificial intelligence company was facing legal scrutiny in the weeks before it went bust. NY Private School Pleads for Donors to Stay Open After Declaring Bankruptcy UAE's AI University Aims to Become Stanford of the Gulf NYC's War on Trash Gets a Glam Squad Pacific Coast Highway to Reopen Near Malibu After January Fires General Counsel Adi Vinyarsh told employees to preserve documents after the US Attorney's Office for the Southern District of New York requested information including accounting policies and a list of customers, according to an internal company email reviewed by Bloomberg and people familiar with the matter. The request followed reports about the London-based company's change of leadership and financial issues, according to the May 8 email from Vinyarsh and the people, who asked not to be identified because the request isn't public. The internal email said the request was a subpoena from the US Attorney's Office in Manhattan. Bloomberg reported in March that multiple former employees had alleged that the company, which helps businesses quickly create custom smartphone apps, inflated sales figures on several occasions. The founder and chief executive officer of the AI firm, Sachin Dev Duggal, was ousted in February. The US Attorney's Office in Manhattan, and Duggal didn't immediately respond messages seeking comment. Duggal wasn't mentioned in Vinyarsh's email. Subpoenas from federal prosecutors are often requests to provide information as part of an investigation. The Manhattan US attorney is one of the most powerful US prosecutors. which was valued at about $1.5 billion in a 2023 fundraising round led by the Qatar Investment Authority, said last week it was appointing an administrator to oversee its insolvency and began to wind down operations. Microsoft Corp. also made an equity investment in 2023 as part of a strategic partnership. collapse came after a group of creditors, led by Israeli firm Viola Credit, seized most of the company's cash following revelations that it had overstated its revenue forecast by 300%, Bloomberg reported Thursday. The company was an early success story for European tech. The World Bank Group's International Finance Corp., Hollywood mogul Jeffrey Katzenberg's WndrCo, Lakestar and SoftBank Group Corp.'s Deepcore incubator also invested in --With assistance from Newley Purnell and Chris Dolmetsch. Why Apple Still Hasn't Cracked AI How Coach Handbags Became a Gen Z Status Symbol AI Is Helping Executives Tackle the Dreaded Post-Vacation Inbox Inside the First Stargate AI Data Center Anthropic Is Trying to Win the AI Race Without Losing Its Soul ©2025 Bloomberg L.P. Sign in to access your portfolio
Straits Times
23-05-2025
- Business
- Straits Times
Builder.ai, AI start-up with operations in Singapore, overestimated sales by 300%
The company, valued at about US$1.5 billion in its last fundraising round, is now planning to file for bankruptcy. PHOTO: LONDON – When was seeking an emergency loan last year, the start-up gave lenders a revenue forecast that proved to be four times its actual sales, people familiar with the matter said. A group of creditors, led by Israeli firm Viola Credit, were originally told that projected sales of US$220 million (S$284 million) for 2024, the people said. The company later disclosed that the actual revenue amount for the year turned out to be about US$50 million, they said. That revelation was one of the factors that ultimately led the lenders to seize most of the UK-based AI start-up's cash, the people said. The company, which has operations in Singapore and was valued at US$1.5 billion in its last fundraising round, is now planning to file for bankruptcy. It marks the biggest collapse of an AI start-up since ChatGPT's 2022 release ushered in a surge of investment in the industry. founder and former chief executive officer Sachin Dev Duggal hasn't responded to several requests for comment via phone and email. and Viola declined to comment. Representatives from the other members of the creditor consortium didn't respond to requests for comment. The board was first alerted that something was amiss in December, when Mr Duggal came back asking for more funds after the loan, one of the people said. It conducted another round of due diligence and found that revenue was actually on track to be near US$100 million, the people said. By February, the board pushed out Mr Duggal and had authorised a US$75 million injection into the company, one of the people said. It appointed Manpreet Ratia – an executive from its Singapore-based investor Jungle Ventures – as CEO and assigned an independent auditor to go through the books. That audit revealed that the final revenue figure for the year was about US$50 million, the people said. At that point, the creditor consortium seized the cash in the company's bank accounts, about US$37 million. whose platform lets businesses quickly create custom smartphone apps, was an early success story for European tech, raising funds from Microsoft and the Qatar Investment Authority. 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. In a letter on May 20 to employees that was shared with Bloomberg, the company said it was 'unable to recover from historic challenges and past decisions that placed significant strain on its financial position.' said it will appoint an administrator to oversee the process. BLOOMBERG Join ST's WhatsApp Channel and get the latest news and must-reads.
Tahawul Tech
04-03-2025
- Business
- Tahawul Tech
MWC 2025: 'Gen AI can convert Analog data to digital in order to make the intelligence consumable' – Nakul Duggal, Qualcomm
CNME Editor Mark Forker attended an exclusive media roundtable hosted by Nakul Duggal, Group General Manager of Automotive, Industrial and Embedded IoT and Cloud Computing at Qualcomm Technologies, on Day 1 of Mobile World Congress in Barcelona. The main theme of his presentation was unsurprisingly focused on how AI is completely transforming major industries on a global scale – and how Qualcomm are powering that movement. Duggal highlighted that the change catalysts behind the AI transformation of industries at scale rely on the core principles of the edge is always connected, the edge is AI-enabled, and workflows are AI-aware. In a extensive overview of Qualcomm's portfolio of AI solutions and products, Duggal outlined the power of LLMs in making the data from Analog-to-digital more consumable. 'There is a common theme with our use-cases. It is evident that there is a tremendous amount of Analog information out there, but it's hard to extract intelligence from it. However, if you put a Large Language Model (LLM) behind the translation of Analog-to-digital then you can consume that information more effectively. AI at the edge makes the sensor intelligent, and that Gen AI power makes the intelligence easier to digest and consume. The Analog world as we know is being converted into a digital world, and it is being done through AI,' said Duggal. Qualcomm's AI On-Prem portfolio was introduced at CES 2025, and IBM Watson's X model is now available at Qualcomm's AI Hub. Duggal highlighted how the partnership between Qualcomm and IBM will enable greater governance on AI solutions for businesses, and said it will also enable greater efficiency and reliability. 'At CES 2025, Qualcomm Technologies and IBM announced an expanded collaboration to drive enterprise-grade generative AI solutions across edge and cloud. This partnership includes enabling support for IBM's Granite models through the Qualcomm® AI Hub, and showcasing integration of across edge devices powered by Qualcomm Technologies' platforms to help address security, efficiency, reliability, and governance on AI solutions for businesses,' said Duggal. Duggal also referenced some notable new product announcements and acquisitions, but those are under embargo until Embedded World on March 10th.
