Latest news with #Ratia
Yahoo
02-06-2025
- 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
29-05-2025
- 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
27-05-2025
- Business
- Yahoo
Builder.ai's Shocking $450M Fall: Microsoft And QIA-Backed No-Code AI Darling Files For Bankruptcy After Creditor Seizure
the British no-code AI startup once celebrated for its strategic partnership with Microsoft (NASDAQ:MSFT) and a $250 million raise led by the Qatar Investment Authority, announced Tuesday that it is filing for bankruptcy protection. According to Bloomberg, the dramatic fall comes after a major lender, Viola Credit, seized $37 million from the company's accounts, leaving just $5 million in restricted funds, effectively paralyzing operations across five countries. Don't Miss: Hasbro, MGM, and Skechers trust this AI marketing firm — 'Scrolling To UBI' — Deloitte's #1 fastest-growing software company allows users to earn money on their phones. CEO Manpreet Ratia replaced founder Sachin Dev Duggal earlier this year in a boardroom shake-up aimed at restoring investor confidence. Ratia said that most of the company's employees have been laid off and that will now begin bankruptcy filings in each of its operational jurisdictions, including the U.K., U.S., UAE, Singapore, and India, Bloomberg reports. Founded in 2016, positioned itself as a revolutionary tool for businesses to build custom apps using AI with minimal coding. It raised over $450 million in total funding, attracting marquee investors like Microsoft, the World Bank's IFC, Jeffrey Katzenberg's WndrCo, Lakestar, and SoftBank's DeepCore incubator, Bloomberg reports. In May 2023, Microsoft made an equity investment and announced plans to integrate platform with its own Azure and AI services. offered a platform that allowed businesses to create custom smartphone apps with little or no coding, aiming to simplify and accelerate the app development process. The company positioned itself as a no-code AI solution, gaining attention during the surge of interest in generative AI, Bloomberg says. However, recent developments signaled deeper challenges within the company's operations. Trending: Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — Less than two months ago, confirmed it had revised down key sales figures and appointed auditors to examine financials from the past two years. Former employees raised concerns that sales performance had been inflated in previous investor briefings. According to Bloomberg, these allegations triggered a domino effect of investor caution, internal restructuring, and eventual loss of confidence. The turning point came when Viola Credit, which had lent the company $50 million in 2023, seized $37 million from its accounts, leaving unable to meet payroll obligations or continue core operations. The remaining funds, located in Indian accounts, are restricted due to regulatory limitations, Ratia told Bloomberg. The insolvency proceedings reflect a growing wave of AI startup turbulence. Phil Brunkard, executive counselor at Info-Tech Research Group, told Computer World that many AI firms rushed to scale on the back of hype, often lacking strong financial controls or truly differentiated situation is complicated by its international footprint, Bloomberg reports. Insolvency laws differ across the five regions where it operates, with the U.K. process involving the appointment of a court-approved administrator. The company said in the LinkedIn statement that it will work closely with administrators to explore options for salvaging parts of the business, while also prioritizing communication with affected employees, customers, and partners. expressed gratitude to its team and stakeholders in the statement, but acknowledged that past missteps had pushed the company beyond recovery. For a firm once hailed as the future of no-code AI, the collapse may highlight growing scrutiny around startup fundamentals amid the AI investment boom. Read Next: Invest where it hurts — and help millions heal:. Deloitte's fastest-growing software company partners with Amazon, Walmart & Target – Image: Shutterstock Up Next: Transform your trading with Benzinga Edge's one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today's competitive market. Get the latest stock analysis from Benzinga? MICROSOFT (MSFT): Free Stock Analysis Report This article Shocking $450M Fall: Microsoft And QIA-Backed No-Code AI Darling Files For Bankruptcy After Creditor Seizure originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved. 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
Business Times
21-05-2025
- Business
- Business Times
Microsoft-backed Builder.ai set for bankruptcy after cash seized
[LONDON] the British artificial intelligence startup backed by Microsoft and the Qatar Investment Authority, is filing for bankruptcy after the chief executive officer said a major creditor had seized most of its cash. Viola Credit, which provided US$50 million in debt to the software firm last year, has seized US$37 million from accounts, leaving the company with US$5 million, chief executive officer Manpreet Ratia said in an interview on Tuesday (May 20), 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, Ratia said. With the startup short on cash, Ratia said he'd made the difficult decision to let go of most of 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. Microsoft also made an equity investment in 2023 as part of a strategic partnership. Less than two months ago, 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. missteps show the risks inherent in the rush to back promising AI startups, as investors seek to replicate the success of heavyweights such as OpenAI and Anthropic. After the debut of ChatGPT, London-based rode investor enthusiasm for AI to attract big-name investors. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The firm's founder, Sachin Dev Duggal, stepped down as CEO in February and was replaced by Ratia. At the time, also cut its board to five seats from nine, and asked 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,' said in a statement on Tuesday. 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, Hollywood mogul Jeffrey Katzenberg's WndrCo, Lakestar and SoftBank Group's DeepCore incubator have also invested in the company. Insolvency cases in the UK, where is based, and in countries with similar laws are different from bankruptcies in the US. UK insolvencies are typically overseeing by a court-approved administrator who works directly with creditors, bypassing current managers. In the US, managers stay in place and any major decisions, like selling assets or borrowing money, must be approved by a federal judge. The two systems both typically require creditors to vote on any reorganisation plan. Established in 2016, 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
Straits Times
21-05-2025
- Business
- Straits Times
Once worth over $1.3 billion, AI start-up Builder.ai filing for bankruptcy
stunning fall from grace show the risks inherent in the rush to back promising AI start-ups. PHOTO: LONDON – 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. 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 accounts, leaving the company with US$5 million, 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 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, 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. 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 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, 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,' 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, 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 Join ST's Telegram channel and get the latest breaking news delivered to you.
