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Indian Express
3 hours ago
- Business
- Indian Express
Builder.ai, DailyHunt parent VerSe faked revenue from sham deals as part of ‘round-tripping': Report
a London-based AI startup bound for bankruptcy, allegedly colluded with Indian social media startup VerSe Innovation to fabricate business deals and present artificially inflated sales figures to investors. The two companies regularly billed each other for nearly the same amounts even though neither of them actually provided the products and services in a practice known as 'round-tripping', according to a report by Bloomberg. is a platform used to build apps and software using AI with 'no tech knowledge needed.' In May this year, the company announced that it was planning to file for bankruptcy after lenders decided to seize most of its funds. Once valued at $1.5 billion, is one of the most prominent AI startups to fail amid an investment frenzy first sparked by the launch of ChatGPT in 2022. Its collapse serves as a stark reminder of the risks involved in rushing to back the next OpenAI or Anthropic. VerSe Innovation, on the other hand, is the Bengaluru-based parent company of popular news aggregator app DailyHunt, which reportedly has more than 350 million monthly users. Over four years, reported receiving nearly $60 million in revenue from VerSe for services such as app development. The AI startup, in turn, transferred funds to VerSe and its subsidiary, Quark Media Tech, for services such as marketing, as per the report. Although the transfers didn't happen at exactly the same time, both and VerSe received nearly the same amount from each other, Bloomberg reported. However, Umang Bedi, one of the co-founders of VerSe, has dismissed the allegations of round-tripping as 'absolutely baseless and false'. 'We're not the kind of company that is in the business of inflating revenues,' he was quoted as saying by the business news outlet. 'There is no correlation on any timing of any payment to any partner,' he added. VerSe's investors include Goldman Sachs and Google. In 2022, the startup raised $805 million from the Canada Pension Plan Investment Board and other investors at a $5 billion valuation. Meanwhile, has been backed by Microsoft, Insight Partners and the Qatar Investment Authority (QIA), one of the world's largest sovereign wealth funds. In 2023, Microsoft had announced that solutions would be integrated with its cloud and Teams. founder Sachin Dev Duggal exited the company in February this year. He was replaced by Manpreet Ratia as CEO. 'With no viable alternatives, the Board has made the extremely difficult decision to enter into insolvency,' Ratia reportedly wrote in an internal email a few months later.
The National
3 days ago
- Business
- The National
Subpoenas issued after Builder.ai declares insolvency
Some current and former staffers at 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 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 '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 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 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, 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. 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 survive in a different guise. Mr Duggal, whose confidence and bold projections helped to put on the map, did not immediately respond to The National's requests for comment. He did, however, post some thoughts on a 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 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.
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.
Mint
22-05-2025
- Business
- Mint
Mint Explainer: How can Builder.ai's collapse impact AI investments in India?
BENGALURU : Once hailed as a pioneer in the low-code/no-code (LCNC) movement, London-based formerly known as has filed for insolvency. Founded in 2016 by Sachin Dev Duggal and Saurabh Dhoot, two entrepreneurs from India's national capital region, raised around $450 million from top-tier investors, including SoftBank's DeepCore, Microsoft, Qatar Investment Authority, Insight Partners, International Finance Corporation (IFC), Lakestar, Jungle Ventures, and Iconiq Capital. Their value proposition was simple yet ambitious: make app development 'as easy as ordering pizza" by enabling users to build custom applications without needing to write code. However, the startup, valued at $1.7 billion at its peak, saw a rapid rise and a dramatic fall in its last two years. Mint explains what led to its downfall. What is It is an LCNC platform that allows people to build custom apps for their mobile devices without requiring any technical know-how. In the company's words, they wanted to make the process of building an app as 'easy as ordering pizza". Also Read: What Google Search's chief has to say on AI—an extension, not a replacement Originally named the company was launched with the vision of using artificial intelligence (AI) to democratise software development. The founders sought to combine the power of AI with human expertise to deliver scalable and customised apps for clients ranging from individuals to enterprises. In November 2018, over two years after it was founded, raised its first round of funding in a $29.5 million Series A round led by European venture capital firm Lakestar and Indian early-stage venture capital firm Jungle Ventures. Softbank's AI incubator, DeepCore, also participated in that round. The company went straight for a Series C round, raising $100 million from venture capital and private equity firm Insight Partners and IFC. WndrCo, founded by file hosting service Dropbox's former head of business and chief financial officer Sujay Jaswa and Jeffrey Katzenberg, also participated. In 2023, it raised a $250 million Series D round led by the Qatar Investment Authority and joined by Microsoft and American investment management firm Iconiq Capital. However, within a year, the company faced data leaks, governance controversies, and regulatory investigations. By early 2025, its founder stepped down, and a board shake-up ensued. Despite course-correction efforts, the firm ran out of money, culminating in its insolvency filing. What went wrong at Over time, has courted its fair share of controversies, whether it's accusations of inflated tech expertise or financial mismanagement so severe that a member of the company's board had to step in to take charge. As early as 2019, the company was accused of not having an AI-based platform but instead relying on human engineers to write the code, according to a report from the Wall Street Journal. In essence, the firm was hiring cheap offshore labour to manually build apps, raising questions about whether its AI claims were merely a façade to attract investors. Also Read: Indian companies lag in workforce upskilling amid AI disruption, job cuts Soon after, Duggal released a note on the company website saying they had offered to speak with the WSJ six times and that the newspaper didn't report on the answers that had provided. That same year, its chief business officer sued the startup for exaggerating its AI capabilities so as to raise funding that they'd use to build the technology, according to a report from The Verge. Then, in 2024, according to a Financial Times report, India's financial investigation agency, the Enforcement Directorate (ED), named Duggal and Dhoot in a money laundering probe and a loan fraud case, respectively. Dhoot is the nephew of the late Venugopal Dhoot, chairman of Videocon Group, the Indian conglomerate that filed for bankruptcy in 2018 after defaulting on massive bank loans. Indian enforcement agencies formally named the co-founder in a criminal case for participating in a 'criminal conspiracy" to fraudulently secure loans from some of the country's largest state-owned banks as part of the broader Videocon-ICICI Bank scandal. Duggal was also being investigated for his ties with Videocon. The ED summoned him in 2022, but he didn't show up. The agency changed his designation from 'witness" to 'suspect", according to the FT report. In December 2024, the company unwillingly exposed sensitive user data online after a researcher discovered an archive with over three million records online, according to a report from Tech Radar. The archive included non-disclosure agreements, billing-related documents, tax documents, internal file images, and more. In February 2025, as investor confidence waned, board initiated a governance overhaul. Manpreet Ratia, managing partner at Jungle Ventures, replaced Duggal as CEO. The board was reduced from nine seats to five, and Duggal relinquished control over most of them. Jungle Ventures, which had participated in the company's first funding round, effectively took the reins to attempt a last-minute salvage operation. In March, the company was once more accused of using auditors with direct connections to Duggal, the FT reported. The partner of the auditing firm had previously served as director at a company set up by Duggal. Will it impact VC appetite for AI in India? has now joined a growing list of Indian startups that have had to close or are in deep waters due to fraudulent activities and poor corporate governance. The most recent examples include BluSmart, Bizongo, Medikabazaar, and Kult App, among others. Also Read: Mint Explainer: Microsoft envisions a web driven by AI agents. What will it look like? However, while collapse may raise red flags about governance, it is unlikely to derail overall investor interest in India's AI ecosystem. Industry leaders and investors argue that this is more a case of a single company's failure rather than a systemic issue. 'Just like one swallow doesn't make a summer, similarly, one doesn't dampen investor sentiment. It just makes investors more careful on governance," said Akshay Gupta, whole-time director of Prime Securities, an investment banking and corporate advisory services company. There's some truth to it. According to the Stanford AI Index 2024, India currently ranks number one in AI skill penetration globally. At the same time, VC firms are looking at both founders and their startups more critically, especially those building in the application layer. 'Venture capital firms are now moving from valuation-first to validation-first investing. They are prioritising tech validation, customer traction and ethical AI practices," said Munish Vaid, vice president at Primus Partners. 'A few incidents would not change the underlying fundamentals, which remain strong: India has deep technical talent, unique cost advantages, and the ability to productise AI globally. Investors will simply be more selective and thorough, not less interested," said Ravi Srivastava, partner at Leo Capital, an early-stage VC firm. But not everyone is convinced that fall won't affect foreign investment. 'This signals that even late-stage unicorns are not insulated from elementary governance failures. Similar collapses at other startups have eroded confidence in financial reporting and transparency," said Siddharth Mody, partner at JSA Advocates & Solicitors. As a result, Mody said it's not just international capital that becomes more selective, but that 'reputational damage also extends to global corporates and limited partners that backed these companies without insisting on tighter oversight". 'The Indian startup ecosystem needs more capital but also more accountability. Founders, boards, and investors must align around the principle that governance is not a post-public listing requirement but a precondition to scale," he added. How has the LCNC ecosystem evolved? The LCNC movement has matured considerably since early days in 2016. What began as a drag-and-drop solution for building apps without programming knowledge has evolved into a sophisticated AI-assisted development paradigm now termed 'vibe coding". Unlike traditional LCNC platforms, vibe coding retains full-stack power while making development faster and more intuitive via AI prompts, automation, and smart code generation. The Indian LCNC market has grown from $400 million in 2020–21 to a projected $4 billion in 2025, according to IT industry body Nasscom. Still, experts warn that these tools are best suited for rapid prototyping and internal tooling, not yet ready for compute-heavy or highly regulated enterprise environments. Performance, security, and integration complexity remain barriers to full-scale enterprise adoption. Sakshi Sadashiv in New Delhi contributed to the explainer.
TECHx
26-04-2025
- Business
- TECHx
Why AI Startups Choose the UAE as Their Global Launchpad
Home » Startups » Why AI Startups Choose the UAE as Their Global Launchpad AI startups from around the world are choosing the UAE as their base, speakers revealed at the Dubai Assembly for AI, part of Dubai AI Week 2025. They highlighted the country's fast pace of innovation and its growing reputation as a hub for research and talent. During a session titled 'Dubai as a Launchpad: Competing on the Global Stage,' Sachin Dev Duggal, Founder and Chief Wizard of explained why his company moved its headquarters to Dubai. He said the UAE offers market stability, high demand across the GCC, and a government that supports AI-powered platforms. He added that with capital, talent, and R&D aligned, the UAE has all the ingredients to become a global hub for breakthrough technologies. Similarly, Jad Antoun, CEO of Huspy, called the UAE's Golden Visa programme a 'gamechanger.' He said it provides the stability needed to build a global company and attract world-class talent. Meanwhile, Lin Kayser, CEO of Leap71, shared his experience of moving to Dubai. He noted the supportive environment and openness to innovation, describing it as a 'breath of fresh air.' Overall, speakers agreed that AI startups in the UAE benefit from strong government support, a stable market, and easy access to regional and global opportunities. As a result, more companies are expected to join the UAE's growing AI ecosystem.
